Contractual clauses such as these are called non-discharge and horizontal defence provisions. These provisions may be included in operations and maintenance agreements, which should also result in their inclusion in EPC contracts or otherwise in a separate coordination or wrapping agreement defining the coordination and interface obligations of the parties with regard to the project. A fully concluded operation and maintenance contract is an agreement in which all obligations and responsibilities for the operation and maintenance of the project are clearly transferred to the operator and the project company and the project lenders have a direct line of recourse to the operator. For example, suppose that important aspects of the operation and maintenance of the facility (especially those that may affect the performance of the facility) are performed by a third party under another agreement. Where the operator and the EPC contractor are identical undertakings or related undertakings, the agreement should prevent one from relying on a delay or under-performance of the other in order to obtain compensation from the owner under its contract. The agreement should also prevent a contractor from relying on the actions of the other to defend against a claim by the owner for delay or non-performance. Operations and maintenance contracts must refer to all levels of performance achieved by the EPC contractor at the time of delivery. Those values, adjusted for deterioration, should establish the starting point for the operator`s performance obligations. For example, in the case of an energy project, it is imperative that technical and legal advisors ensure that the performance review and guarantee, as well as the agreement`s lump-sum compensation plans, are in accordance with the appropriate timelines for the construction contract. Operations and maintenance contracts establish contractual agreements between project companies and professional operators for the maintenance and operation of project facilities.

Lump sum damages are financial compensation for loss, damage or breach by a party to an agreement granted by a contractual provision relating to the breach of the agreement. Contracts or agreements that involve the exchange of money or the promise of performance, such as.B. Operations and maintenance agreements often contain a provision for lump-sum damages. The purpose of a lump-sum damages provision is to determine a predetermined amount to be paid if a party fails to perform the agreed performance. A lump sum compensation may only be provided for in a contract if (1) the damage is uncertain or difficult to quantify; (2) the amount is reasonable and takes into account the actual or foreseeable damage caused by the breach, the difficulty of proving the actual damage and the difficulty of finding another reasonable remedy; and (3) the damages are structured in such a way that they act as damage and not as punishment. If these criteria are not met, a lump sum damages clause is void. Direct agreement O&M Direct operation and maintenance contract relating to the O&M contract of 24 September 2010 between STOMO, GDF SUEZ CC SCRL, Al Batinah Power and Credit Agricole Corporate & Investment Bank. The O&M agreement should include provisions that set out in as much detail as possible the consequences of the operator`s failure to fulfil its performance obligations, including lump sum damages or other financial damages. In most cases, operations and maintenance contracts set minimum performance levels below which the operator is deemed to have defaulted under the agreement, as well as the options and remedies available to the owner.

CMS Maroc Operating Co. SCA and Jorf may default under the Direct Operations and Maintenance Agreement for jorf financing because they have amended the jorf project operation and maintenance agreement without obtaining formal approval from Jorf`s lead lenders. Finally, parties to long-term operation and maintenance contracts should be aware of the possibility that changes may occur that could affect the long-term nature of the operation, such as. B, changes in the political regime or regulatory changes. In anticipation of such cases, the operator`s right to compensation and additional compensation must be clearly stated in the agreement. In a perfect world, these requirements are balanced by the project company`s eligibility under a removal agreement or other project documents. The description of the operator`s tasks is often complex and requires significant project management and technical expertise. A simpler approach is to describe the operator`s requirements in general and link them to the performance outcomes required by the agreement and include everything necessary and ancillary to that delivery. Operation and maintenance contracts (operation and maintenance agreements) are generally short-term contracts with a duration of two to five years that establish a contractual agreement between the project company and a professional operator for the provision of operation and maintenance services for the project. They determine the extent of the operator`s duties and responsibilities, as well as the remuneration, which is usually a fixed fee. Operations and maintenance agreements sometimes also provide for performance-related costs and, conversely, lump sum damages for non-compliance with the required performance benchmarks. Operations and maintenance contracts should, where appropriate, specify the operator`s performance obligations.

Performance testing typically includes things like availability, failures, production steps, and other technical, quality, safety, and environmental performance criteria. The agreement should also specify the minimum performance levels that trigger the owner`s rights to compensation or termination under the agreement if they are not respected. In some cases, the D&E agreement may also provide for an upward sharing mechanism that provides for additional remuneration in the event that the performance of the project exceeds the contractually agreed level. Operations and maintenance contracts should provide for adjustments to the operator`s remuneration if the operator`s obligations are extended or reduced during the term of the contract. For example, where the amounts paid to the operator are based on the operational efficiency of the installation, the agreement should provide for an adjustment of the payment to the operator if the quality of the fuel or other consumables is lower than the technical criteria set out in the agreement. The most essential contractual obligation of the operator in operation and maintenance contracts is to operate and maintain the project for the duration of the operation and maintenance contract. It is of paramount importance to know whether the operator`s responsibilities are defined in sufficient detail. Operations and maintenance contracts must contain conditions such as: The o&M supplier`s ability to terminate the O&M contract is limited by the terms of the O&M direct contract – see O&M direct contract below. Compensation in the event of terminationUnder the O&M contract, the remuneration must be paid by AssetCo to the O&M provider after termination due to a default by AssetCo. .