The Request for Qualification and Proposals for New Generation Capacity under the Coal Baseload IPP Procurement Programme (RFP) requires bidders to provide a detailed and comprehensive term sheet or a substantially developed agreement with each of the proposed EPC and O&M contractors for the construction and operation of the facility. This is a significantly different approach from the approach of the Department of Energy in the fourth bid submission phase of the Renewable Energy IPP Procurement Programme (REIPP) where this was not a requirement at all. It will involve bidders being required to do more upfront work.
Key terms of term sheet/substantially developed agreement
The RFP requires a number of terms in the term sheets or substantially developed agreements.
Each of the term sheets or substantially developed agreements must include the following terms as a minimum:
- the term of the subcontract;
- the price cap of the price to be paid for the services rendered by the subcontractors;
- undertakings or warranties to ensure compliance with laws by the subcontractors;
- that contractors are in possession of or will obtain any consents, permits and/or licences that may be necessary for the construction or operation of the facility;
- complete and accurate details of the scope of work to be undertaken by each subcontractor;
- inspection requirements and obligations, testing and commissioning to be undertaken;
- all conditions on which the parties have entered into the subcontracts, including all suspensive conditions;
- the termination provisions, including force majeure, system event, compensation event, unforeseeable conduct and site risk;
- any security, performance guarantees and/or penalties or damages under the subcontracts;
- the relevant subcontractors’ compliance with the applicable economic development obligations and reporting requirements; and
- the spare parts to be provided for the purposes of the facility.
Despite the fact that a bidder may have submitted a detailed and comprehensive term sheet or a substantially developed agreement with each of the proposed subcontractors, which contains the minimum requisite terms, the Department of Energy reserves the right not to pass any bidder who submits term sheets or agreements which are, in its sole opinion, unsatisfactory.