Luke Hung and Sally Yang
To reduce the risks of infection and assist private institutions that have participated in Promotion of Private Participation cases (hereinafter, the “PPP Cases”)to overcome the difficulties, the Ministry of Finance issued the Tai-Cai-Cu-1025513690 Circular of May 28, 2021 to announce the “Flexible Adjustment Measures for Authority-in-Charge of the PPP Cases to Accommodate the COVID-19 Pandemic”, which serves as the basis for handling relevant operations by the authority-in-charge of the PPP Cases. The measures are highlighted below:
I. Feasibility study:
1. The review of a report may be alternatively conducted via video conference.
2. For non-urgent cases, public hearings may be conducted on a small scale at multiple times when the epidemic has not reached the level three alert, depending on the epidemic status.
3. If a public hearing is postponed when an authority-in-charge ‘s agreement on entrusted professional consultation services contains a deadline for the completion of the feasibility study, this matter may be handled as a force majeure or exceptional incident under a procurement agreement and does not constitute a default as a result of the postponement.
II. Preliminary planning:
The authority-in-charge may including the following relief measures in the draft investment contract of the tender documents as part of the remedial measures for the chapter of the force majeure and exceptional incidents:
1. Allowing installment payment, deferred payment, or reduction of land rents or royalties.
2. Suspending the calculation of the construction or operation period.
3. Properly extending the construction or operation period, depending on the circumstances.
4. Providing proper givebacks to affiliated vendors or public construction service users in the PPP case that have received the relief.
III. Announcement of invitation to tender:
1. Tender documents may be provided electronically, and the deadline for acquire the tender documentsmay be extended via public announcement.
2. A tender invitation hearing may be conducted via video conference or in writing to invite recommendations from private investors.
3. Before the announced invitation period expires, thedeadline of application may be extended, depending on the epidemic status. For cases not yet announced with the willingness of the applicants to invest may be potentially affected by the severity of an epidemic according to the authority-in-charge’s assessment, the authority-in-charge may suspend or cancel the announcement until the epidemic is relaxed.
IV. Evaluation:
The comprehensive review meeting may be conducted via video conference, but attention should be paid to confidentiality and the principle of fairness.
V. Contract negotiation and execution:
1. Opinions may be exchanged in writing first before a physical meeting or a video conference is conducted.
2. If the authority-in-charge believes that the epidemic is a special circumstance, the term of contract negotiation, the deadlineof preparatory work and contracting of the best applicant may be extended.
3. If the original draft investment contract has no epidemic adjustment measures, both parties may agree to negotiate the inclusion of relief measures in the terms of the contract within a certain period.
VI. Period of performance:
To accommodate an epidemic, a private institution may negotiate relief measures with the authority-in-charge in accordance with the contract or civil laws and regulations.
1. Allowing installment payment, deferred payment, or reduction of land rents or royalties.
2. Suspending the calculation of the construction or operation period.
3. Properly extending the construction or operation period, depending on the circumstances.
4. Providing proper givebacks to affiliated vendors or public construction service users in the PPP case that have received the relief.
For a contract in force, the Ministry of Finance has indicated[1] that a private organization may approach the organizer for the above relief measures based on the investment contract as detailed below:
1. For “payable rents that are reduced, exempted, or allowed to be deferred,” the organizer may reduce, exempt, or allow the deferral of the payable rents in accordance with Article 4 of the “Regulations for Preferential Rentals Regarding Public Land Lease and Superficies for Promotion of Private Participation in Infrastructure Projects” if the construction or operation is affected by epidemics or other major force majeure incidents.
2. For the “extension to the construction or operation period,” the method for calculating the specific extension provided in the Tai-Cai-Cu-11025506050 Circular of March 11, 2021 from the Ministry of Finance should be followed:
(1) Concerning the referential value for the extended operating period, if a private institution requests an extension of the operating period, it may submit a profit and loss statement certified by a certified public account, a pre-audit financial statement or a financial statement for 12 consecutive months from the month of the epidemic impact for the purpose of calculating the annual profit and loss.
(2) The objective of calculating an extended operating period is to maintain the original profitability level of the private institution under normal conditions. In addition, the number of years rounded to the nearest whole number during the implementation of the relief regulations is used as the minimum threshold value for the extended operating period, and it is recommended to use a full year as a more appropriate minimum unit for the extended operating period.
(3) In principle, the extended operating period should not exceed the years of operation under the original contract. The commencement date of the extended operating period should be the day after the expiration of the operating period under the original contract.
[1] https://www.mof.gov.tw/covid19/singlehtml/1ec3fb3d866d4409bd2ba6720c27ba83?cntId=6ad1aa1bc2aa4912b1d0e38b119adcfe