JSTL: Promoter and Lender Rights in Public-Private Partnership Termination

In March 2017, the chief executive officer of Uniquest Infra Ventures Pvt. Ltd (Uniquest) was facing several critical decisions. The National Highway Authority of India had terminated the concession agreement of a 30-year project for the upgrading the Jetpur Somnath highway in India. Uniquest was an equity partner of Jetpur Somnath Tollways Limited, the concessionaire for the project. Uniquest was risking losing its ₹5 billion investment due to the termination of the concession agreement, which cited failure to commence construction on the Junagadh bypass. The National Highway Authority of India’s decision to terminate the concession agreement presented a major challenge for Uniquest and its lender partners. However, it also had broader implications for the Indian infrastructure sector. The termination risked undermining government efforts to attract foreign and domestic investments in future highway projects. The premature termination of the concession agreement could also lead to equity and debt write-offs, which could impact the development of India’s public-private partnerships landscape. The chief executive officer of Uniquest had to consider whether to challenge the termination of the project, whether independently or in partnership with the project’s lenders, or if the termination payment amount of just over ₹2.2 billion should be contested instead. With a current debt of over ₹6.4 billion for the project, Uniquest and the project’s debtors were facing major potential losses arising from the decision to terminate the project.

This case is suitable for public-private partnership policy-makers and managers involved in the design and execution of public-private partnership contracts. It is best suited for executive education courses at the MBA or postgraduate level, aimed at conceptualizing and designing public-private partnerships. The case will also benefit executive education programs for finance executives who seek a deeper understanding of what unfolds when projects fail to meet expectations and explores the resulting decision-making dilemmas. The case enables students to learn about the aim of PPPs, which is to create unique value by delivering public infrastructure through shared public and private risk. In this case, it involves complex interactions between a sponsoring agency serving as the public institutions and a concessionaire serving as the private partner. It also involves banks and lenders to provide debt for the project and for the public to use the infrastructure. Specifically, after completion of this case and assignment questions, students will be able to</p><br><br><ul><li>define the conditions leading to public-private partnership termination;</li><li>understand the termination management of public-private partnership projects;</li><li>compare and contrast legally assigned and contractually specified rights of equity holders, lenders, and the government in a public-private partnership project; and</li><li>outline an appreciation of a public-private partnership termination’s short-term and long-term implications.</li></ul>

• Uniquest Infra Ltd
• concession agreement
• project setbacks
• necessary land
• contestation options
• project debtors
• infrastructure sector
• public private partnership
• PPP
• PPP landscape
• government investments
• infrastructure growth
• legal complexities
• financial implications
• national transport
• highway projects
• value destruction
• strategic decisions
• broad implications
• termination risk
• minimizing losses
• stakeholder dynamics