Projects

There are general rules provided for in the Private Investment Law, approved by Law 10/18 of June 26, which are applicable to investment in the energy and infrastructure sector. Rules such as access to tax, exchange, customs and other benefits. Or also the forms of investment.

In addition to these rules, there are special rules for these sectors, of which we highlight the following:

The electricity sector has its main legislative and regulatory source in the Law no. 14-A / 96, of May 31 (General Electricity Law), which establishes the general guidelines the legal regime for the exercise of production, transportation, distribution and use of electrical energy, and has many other relevant diplomas, aimed to regulate its supply; distribution; production and transport chain, as also its commercial relations, including the quality of services, tariff regulation and access to networks and interconnections.

The exercise of electricity production, distribution and transport activities requires authorization from the state or a public legal person, by means of a concession or license.

The construction and operation of the electrical installations associated with the activities of production, distribution and transport of electricity also requires licensing, under the terms of the Installation Licensing Regulation. The competence for licensing these facilities is, as a general rule, the Ministry that supervises energy (Ministry of Energy and Water).

The regulation of the Angolan electrical system determines that the commercialization of electrical energy can be made within the scope of the Public Electrical System (SEP) (e.g. linked) or outside it (i.e. not linked).

Generally

Energy and infrastructure markets in Australia, similar to other developed nations, operate in a heavily regulated environment. There is no specific regime governing or restricting investment in energy or infrastructure in Australia over and above existing regulation for investors and funders more generally. When making an investment, the legal and regulatory position relevant to the underlying project must be considered. For example, a project relating to a hospital will require various environmental and planning approvals, consents, building and operating permits, and work-health and safety accreditations.

Australian Competition and Consumer Commission 

The ACCC regulates a range of infrastructure services, such as energy, communications, water and smaller markets with limited competition. While the ACCC acts as an overarching regulator, investors, owners and operators must also comply with both State and industry-specific regulation. The ACCC facilitates the National Access Regime, which encourages third party access to nationally significant infrastructure services. The ACCC assesses access undertakings lodged by the owners or providers of infrastructure services.

FOREIGN INVESTMENT REVIEW BOARD

All foreign investment proposals in Australia above certain thresholds, determined on a case-by-case basis, are reviewed by the FIRB to ensure such investments are not contrary to the national interest. Notification and approval of foreign investment will differ depending on the type of transaction (i.e. telecommunications or energy transaction), or the type of investor (i.e. private sector or foreign government investor).

FIRB aims to provide a decision within 30 days of being notified. Once formally notified, the Treasurer has 30 days to make a decision and a further 10 days to notify the parties concerned of the outcome. If these timeframes are not met, the Australian Government loses the ability to block the proposal or impose conditions on it. The government may, however, extend the process by up to 90 days by issuing an interim order.

Key sector-specific issues are flagged in the sections below.

Energy

The energy markets in Australia have a complex system of arrangements between suppliers, generators, transmission and distribution which are moderately regulated. Regulation and market oversight of the energy sector is split between the Australian Energy Regulator (AER) (for all states other than WA) and the Australian Energy Market Commission (AEMC).

The National Energy Retail Laws and National Energy Retail Rules, establish a national energy customer framework for the regulation of the retail supply of energy (electricity and gas) to customers where the NEM applies. The laws aim to promote retail competition and empower customers to negotiate energy contracts. The NEM operates on a relatively competitive basis, with generation, transmission and retailing assets split in each state and territory. The market operates with streamlined regulations, limited barriers to access, and minimal direct government intervention. In WA and the NT, where the NEM does not apply, energy is regulated by the Economic Regulation Authority (ERA) and the Utilities Commission, respectively.

Under the NEM, an authorization issued by the AER is required prior to engaging in the retail sale of energy, unless an exemption applies. Under state-based authorities, transmission and distribution businesses are required to be issued with a license before providing transmission and distribution services. Applications must be lodged with the state based regulator and an associated fee will apply.

It is important to note certain infrastructure assets are subject to more stringent safeguards on pricing and staffing, in an effort to preserve community expectations. For example, in the recent sale of Ausgrid (in October 2016), the NSW government implemented legislation prescribing the minimum number of employees the buyer would have to maintain until 2020, and the categorization of employee.

Recently, increasing demand for ‘clean’ energy, alongside firm environmental regulation, has presented concern for external investors wishing to invest in Australia’s energy sector. In 2015, the federal government increased Australia’s Renewable Emission Target to 23.5% of Australia’s electricity generation being sourced from renewable sources by 2020. Investors need to understand how environmental and technology changes may impact on the overarching regulatory framework and should consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with license conditions or the granting of specific subsidies.

Telecoms infrastructure

The telecommunications sector in Australia operates in a competitive market, where the regulatory barriers to entry are limited. The telecommunications sector has two main regulators:

• The ACCC which operates under the Competition and Consumer Act 2010 (Cth) prohibits and prevents carriers engaging in anti-competitive conduct, breaching record-keeping rules or breaching access rules.
• The Australian Communication and Media Authority (ACMA) which operates under the Telecommunications Act 1997 (Cth) and has responsibility over technical matters (i.e. carrier licensing, service provider licensing and number portability). The cabling industry is regulated by the Telecommunications Cabling Provider Rules 2014 (Cth) (CPRs).

The ACCC's access regulation plays a key role in the increase of infrastructure and retail competition in the telecommunication sector. For example, the ACCC assisted opening access to Telstra's line services, increasing competition in retail and broadband networks. ACCC regulation is commonly higher in areas of insufficient competition, namely transmission routes in regional and outer metropolitan areas.

There are two different types of individuals or entities that may provide telecommunication services to the public – being carriers and carriage service providers (CSPs). Carriers are owners of telecommunications networks unit that supply carriage services to the public. The ACMA requires carriers to obtain a carrier license and to comply with certain obligations under the license, unless an exemption applies or the authority allows for nominated authority declarations, whereby another party to takes on the responsibilities of a carrier for a network unit. The Minister for Communication also has the authority to impose license condition declarations, whereby further license conditions are imposed on certain classes of carriers. In contrast, a CSP, a person or entity that supplies a carriage service to the public using a network unit (i.e. internet service providers) is not required to hold a carrier license.

Under the CPRs, all cabling work is required to be performed by a registered cabler or under the express direction of a registered cabler. Cablers are required to register with an ACMA-accredited registrar.

Transport infrastructure

The National Transport Commission operates under the National Transport Commission Act 2003 (Cth) as an independent advisory body with the aim of enhancing safety, productivity and environmental performance of Australia's transport systems. The body provides impartial advice and reform proposals through the Transport and Infrastructure Council.

Rail

The Office of the National Rail Safety Regulator (ONRSR) is responsible for the implementation of safe rail operations and controls a singular set of rail safety laws in Australia, with each state and territory (except QLD) passing enabling legislation to give effect to the Rail Safety National Law. Rail Transport Operators must obtain a license that certifies the competence and capacity of the operator to manage the risks associated with railway operations. The accreditation is required prior to commencing any railway operations.

Roads

The state and territory governments each have government departments which administer the National Prequalification System for Civil (Road and Bridge) Construction Contracts (NPS). The NPS separately takes into consideration the financial and technical capacity of contractors and identifies prequalification categories for road construction, bridge construction and financial levels (referring to financial stability, solvency and capacity to manage cash flow), against which the NPS assesses the capacity of a contractor to undertake contracts of varying risk and complexity. Austroads is the key organization responsible conducting strategic research on transport developments, provides guidance on the design, construction, management and infrastructure of road networks.

Other infrastructure

For most infrastructure assets in the private sector, it is likely that there will be a ‘change of control’ provision requiring the regulator or controlling government to approve the new owner. On publicly-procured infrastructure, it is quite common for long-term projects to have a 'change in control' clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post construction provided any change in control is not to an 'Unsuitable Third Party'.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Belgium over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (eg a government department, a local authority or an autonomous government company) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘Change of Control’. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in Belgium have a complex system of arrangements between suppliers, generators, transmission and distribution network managers which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanisms with suppliers, customer and the layered energy operator system. These are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Both market participants and investors regularly point out the lack of stable regulatory framework which hampers large-scale investments in the Belgian energy market. In particular, uncertainty surrounding the longevity of nuclear plants and fiscal regulations continues. Mild political instability has proven to be an additional cost in this equation.

Telecoms infrastructure

Given the dispersed nature of this sector, various pieces of legislation need to be read jointly to get a sufficient understanding of the applicable regulations. The interplay of competences is not to be underestimated, since the main legislation is to be found at both regional and national levels, in decrees and laws combined. Different permits/licenses may need to be obtained for the performance of various activities in the separate regions.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework to consider in respect of a practical and operational involvement in this sector. Key areas include understanding the regulatory regime for certification for train use and acceptance. As stated above, every service provider needs an Infrabel license in order to operate on the Belgian tracks.

The difficulty of investing in an existing rail project depends upon the nature of the investment and the specific type of entity or asset the investor wishes to invest in/acquire.

Roads

A procuring public sector authority (a federal, regional or local authority) may delegate certain of its statutory duties in respect of certain types of road projects to private sector partners. In assuming these duties, private sector partners will, therefore, need to understand those duties and whether they are able to subcontract those duties to an appropriate person. There is usually a restriction on the change of control of the private sector partner during the construction period. Following the construction period, the private sector may be allowed a change of control provided that they do not fall within a definition of an ‘Unsuitable Third Party’ (which may include concerns about national security or tax avoidance). The precise scope of the restrictions will depend on the contractual terms.

Generally

In Brazil, there are several governmental agencies regulating investment in energy and infrastructure. Every company (including the state-owned companies) which intends to invest in energy and infrastructure is subject to the rules of such governmental agencies.

The governmental agencies have the purpose of establishing internal rules (Decrees and Normative Instructions) for the regulation and supervision of the activities performed by the investors in the specific sectors of Brazilian economy.

Below is the list of the agencies responsible for certain key sectors.

Energy

The 

The main regulatory authorities regarding energy sector include:

• Ministry of Mines and Energy (MME);
• National Policy Council of Energy (CNPE);
• Electricity Sector Monitoring Committee (CMSE);
• Operator of the National Electricity System (ONS);
• Energy Research Company (EPE);
• Electric Power Commercialisation Chamber (CCEE);
• National Water Agency (ANA);
• National Agency of Petroleum, Natural Gas and Biofuels (ANP); and
• Brazilian Electricity Regulatory Agency (ANEEL);

Telecoms infrastructure

The sector of telecommunications is privatized and the private companies are subjected to the rules established by the Brazilian Agency of Telecommunications (ANATEL).

Transport infrastructure

• Waterway transportation is regulated by the National Waterway Transportation Agency (ANTAQ);
• Railroads and roads transportation are regulated by the National Agency of Land Transportation (ANTT); and
• Airways transportation is regulated by the National Civil Aviation Agency (ANAC).

Other infrastructure

The social infrastructure is also regulated by governmental agencies.

Health infrastructure is regulated by the Health Ministry and by the agencies bounded to it, such as the National Agency for Supplementary Health Services (ANS); and the National Health Surveillance Agency (ANVISA).

Education Infrastructure is regulated by the Ministry of Education, which is assisted by the National Education Board.

Generally

There is no specific regime governing or restricting investment generally in infrastructure projects in Canada. Depending on the nature of an investment and the parties involved, a particular investment may be subject to rules of general application. For example, significant mergers may be reviewable under the federal Competition Act and acquisitions of control by foreign entities may be subject to notification and/or substantive review under the federal Investment Canada Act, which has jurisdiction to determine whether an investment by a foreign entity is of ‘net benefit to Canada’. There is closer scrutiny where the investment by a foreign entity may raise issues of national security or where the investing entity is controlled by a foreign government (a ‘state-owned enterprise’). Projects may also be subject to a variety of types of approval ranging from environmental approvals or municipal permitting requirements.

Energy

There are no special rules for investing in oil and gas. As noted above, certain large investments by foreign entities may be reviewed under the Investment Canada Act or Competition Act, and investments by state-owned enterprises may attract additional scrutiny. In particular, the purchase of oil sands projects by state owned enterprises will generally be forbidden.‎

The electricity markets in Canada are heavily regulated. In some cases, these regulations are directly relevant to investment in electricity infrastructure. As one example, in Ontario, severe tax consequences can arise if a municipally owned distribution sells distribution assets to a private-sector entity or undergoes significant investment by a private-sector partner. These consequences have been a significant barrier to private-sector investment in the distribution sector but have recently been the subject of partial, time-limited exemptions (currently set to expire January 1, 2023) that are intended to spur consolidation in the sector.

As discussed further below, the manner in which electricity infrastructure (generation in particular) varies significantly across the country, with jurisdictions like Alberta traditionally preferring deregulated approaches based on merchant market pricing while jurisdictions like Ontario have historically run highly structured procurements that resulted in long-term power purchase agreements at fixed prices. Investors wishing to make greenfield investments in a province therefore need to acquire an intimate understanding of that province’s procurement regime. Ontario’s evolving market is an illustrative case: after running a feed-in tariff (FIT) program for many years that spurred significant private-sector investment in new renewable generation, the province has recently brought that FIT program to an end, is exploring ways to move to more market-based procurements of capacity and energy, and is even exploring options for reducing the cost of legacy power purchase agreements. While Alberta has traditionally pursued a deregulated approach to generation (requiring investors to pursue their own long-term offtake contracts), it has recently started to encourage the development of renewable energy projects by providing long term price supports ‎for selected renewable electricity projects. Investors wishing to invest ‎in existing projects must also review the applicable regime carefully, including for restrictions on changes of control and ‎requirements to retain levels of community and aboriginal equity participation.‎

Telecoms infrastructure

The federal Telecommunications Act places Canadian ownership and control requirements on telecommunications common carriers. As a starting point, telecommunications common carriers must be at least 80% beneficially owned by Canadians with at least 80% of the board comprising Canadian individuals. In 2014, in response to calls to increase competition in the marketplace, the Canadian government introduced an exception to these requirements for carriers having less than 10% market share. Given overwhelming concentration of market share with the large incumbents, this exemption only applies to a very small number of carriers.

Canadian broadcasters are subject to similar Canadian ownership and control requirements.  The voting shares and votes of the broadcaster must be 80% owned by Canadians, Canadians must comprise at least 80% of the board of directors, the CEO must be Canadian, and the broadcaster cannot be controlled in fact by non-Canadians.  Some companies that have integrated telecommunications and broadcasting businesses may be subject to the requirements applicable to broadcasters even if they qualify for the exemption available to smaller telecommunications carriers.

As it currently stands, Canadian ownership and control requirements do not apply to over-the-top video (OTT) broadcasters that distribute programming only through the Internet or on mobile devices in accordance with the CRTC's Exemption order for digital media broadcasting undertakings.  Given the growth of this type of business, the applicable regulations have the potential to evolve in the coming years.

Transport infrastructure

 

For rail infrastructure, while there are rules requiring licensing and other regulatory approvals under federal legislation and regulations, in systems which are operated by ‎municipalities or public agencies, private entities can participate through the provision of infrastructure, including rail systems and rolling ‎stock.  A wide range of private entities participate in the market for the design, construction, operation, maintenance and rehabilitation of ‎rail systems and vehicles. ‎

Since 2004, provinces and municipalities have increasingly looked to alternative procurement models, particularly public-private ‎partnerships for the procurement of rail and LRT projects. ‎

Similarly, in road transportation there are no special rules for investing in entities which are involved in the design and construction of ‎highways or in their maintenance and rehabilitation.  Again, a number of provinces have utilized public-private partnerships as the ‎procurement model for new highways, key road, and bridge infrastructure.‎

Social infrastructure

While hospitals are primarily publicly owned, they are designed, constructed and maintained by private entities and in numerous provinces, public hospitals have been the subject of public-private-partnerships and alternative forms of procurement, notably in British Columbia and Ontario.

Similarly to jurisdictions outside Canada, on infrastructure projects, whether transportation or social, which are procured by the public sector, there is regularly a ‘change in ownership’ restriction which applies in relation to the private entity or consortium carrying out the construction of a publicly procured project. This restriction on change in ownership is often, but not always, removed within a year of two of successful operation of the public facility to enable recycling of capital by entities involved in infrastructure development. This also promotes the development of an active secondary market in infrastructure assets.

Generally

Generally, there are no special rules regarding investing in energy. However, please note that some electrical installations and electrical services need prior electrical concession for their development (article 2° of the General Electric Service Law). Such concessions can be provisional (for study) or definite (for constructing the project or providing the service), and are granted directly to the interested party.

Regarding public infrastructure developed through the concession system, generally the invitation to tender defines the objective parameters and the State offers several guarantees such as guaranteed minimum returns, which minimize the risks involved in the projects. The Chilean banking institutions finance these kinds of concessions.

Energy

Our electrical legislation regulates, in different categories, the generation, transmission and distribution activities introducing certain limitations when the participants have interest in more than one segment. It is expected that the decisions of the different economic agents, operating in each of the generation, transmission and distribution phases, tend to higher efficiency levels than the ones vertically integrated operators could achieve.

Overall energy policy is based on a competitive model for power generation and wholesale commercialization, while energy distribution is considered a regulated monopoly with tariff setting processes based on a target return on asset set by law and efficient theoretical model companies.

Ultimately, the Chilean electricity market encourages competition so that prices reflect the supply and demand balance, in an open market context in the segments which the economic conditions allow.

Telecoms infrastructure

All projects involving the use of radio electric spectrum will be within a regulated framework. Therefore, they will require landing rights to operate, which can be granted either by concessions, licenses or permits, depending on a series of elements, such as services providers and recipients, among others. Thus, once the specifics of a particular project have been settled, it will be possible to define precisely the kind of authorization required.

The radio electric spectrum is submitted to a bidding process, which is evaluated by reviewing the technical characteristics of the project. In fact, the award of the radio electric spectrum does not depend on the economical offers proposed by the interested parties, but only on technical criteria.

Transport infrastructure and other infrastructure

The transport infrastructure can be developed directly by the MOP with public resources and shall be award through a public tender process, considering the technical and economic factors stated in the applicable invitation to tender.

It is important to note, participation in the tender process requires the prior registration of the interested party in the Official Contractor Registry of the MOP, which considers different categories and specialties, depending the characteristics to the works and the investment involved.

In addition, the transport infrastructure can be developed through private resources by means of the concession system.

Generally

Whether a specific investor can invest in a particular project will depend on the terms of the project’s procurement if it is carried out by the public sector. Regarding an existing/operating project, the possibility for a private company to invest will depend on whether there are any contractual restrictions on change of control or contract assignment.

On private sector infrastructure, the investor would need to consider the need of licenses (ie construction, environmental, planning), previous consultations, entity’s consents or permits to carry out the project.

Energy

The energy sector in Colombia is highly regulated and controlled by the Regulation Commission for Energy and Gas (CREG) and the Mining and Energy Planning Unit (UPME) which are the principal state agencies responsible for regulating the energy sector and market in Colombia. These public entities are currently issuing new resolutions regarding regulated and non-regulated users, the tariffs to be charged to the final users, subsidies and the elaboration/update of the National Energy Expansion Plan. Investors should keep in mind if they will be developing in the regulated or non-regulated segments of the energy market, and the advances in the implementation of the regulation regarding alternative energy that was issued in 2001 but that has not had much development yet.

Telecoms infrastructure

Under the regime introduced by Law 1341 of 2009, all telecommunications services (ICT’s) may be freely provided without any license or authorization; the only requirement is for the provider to be registered in a public record. The Communications Regulatory Commission is the state agency in charge of regulating the ICT’s sector in Colombia.

Regarding television, all agents must have a license or contract granted by the National Television Agency for operating and providing television services that usually lasts 10 years.

Transport infrastructure

For a private sector sponsor to carry out a highway project, the company must meet the enabling requirements established by the National Infrastructure Agency (ANI) in a prequalification stage previous to the bidding process: experience in financial investment or project structuring/development and financial capacity. Once the contract is awarded by the ANI, the private investor that will act as a sponsor must constitute a special purpose vehicle (SPV) to execute the specific project that constitutes the object of the contract awarded by the ANI. In addition, the SPV must constitute a trust fund that will manage the project’s equity investments, the debt originated by the lenders, the toll-road collection funds, the commercial exploitation money and the government’s resources when the project requires public funds (Vigencias Futuras).

There is usually a restriction on the change of control of a private sector sponsor in these highway projects: during the pre-operation phase (pre-construction and construction) and until the first year of the operation and maintenance phase, sponsors may assign their participation but the SPV has to maintain as a shareholder holding a 25% equity interest, a party that presented financial and experience requisites during the bidding process; and after the first year of the operation and maintenance phase until the end of the concession without restrictions.

Generally

There are no specific legal regimes concerning the investment in the fields of energy and infrastructure. The necessary sector-specific regulatory aspects would apply mostly in the phase of planning and implementation itself and not regarding funding.

Energy

The energy markets in the Czech Republic have a complex system of arrangements between suppliers, generators, transmission and distribution, which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customer and the Czech Transmission System Operator. These are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move.

Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa. Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

The Czech Act. No. 127/2005 Coll., on Electronic Communications, regulates the telecom sector in a complex way, including definition of relevant parties, their rights and obligations, conditions for regulation, specifics of notification etc.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework also including the conditions for acquiring a license for provision of transport services which must be taken into consideration in respect of involvement in this sector. As mentioned above, after years of monopoly held by the national rail carrier Czech Railways, currently several train operators are in place. However, the tracks/bridges/some stations are still owned by the state-owned company SŽDC. SŽDC allows track access to all carriers complying with conditions set by the Act. No. 266/1994 Coll., the Railway Act.

The Track Access Conditions correspond to European standards and are equal for all carriers. SŽDC concludes a contract for rail transport operation with a carrier who has met conditions of the track access. For more details see Network Statement on national and regional rail issued by SŽDC.

The basic conditions for access to the railway infrastructure include to:

• be registered in the Company Register;
• hold a valid license to operate rail transport;
• hold a valid certificate of a carrier;
• effect liability insurance for damage incurred by the rail transport operation;
• conclude a rail transport operation contract with the rail operator; and
• be allocated track capacity.

For more details see Railway Act No. 266/1994 Coll., as amended and the Network Statement on national and regional rail issued by SŽDC.

Roads

Administration of roads is in the hands of the state, municipal or other public sector entities. The relevant public sector entity is also responsible for carrying out the maintenance of the roads. However, such duties may be delegated to the private sector partners, based on the relevant procurement rules. With respect to the highways, an example of this is the private company Kapsch, which has installed the toll gates on highways and is in charge of collecting toll-fees in the Czech Republic.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Finland over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made) the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission; and a project may need environmental authorizations and/or sector specific regulatory consents or licenses.

Energy

The energy markets in Finland are open to competition (with the exception of Åland) and there are no restrictions on entering into the market. However, the regulation is fairly complex: while the production and sales of electricity are open to competition, distribution activities are divided into regional monopolies, subject to permits and are under the surveillance of Energy Market Authorities.

Production activities are heavily regulated and supported by legislation and authorities (eg for environmental reasons).

Electricity production facilities are capital-intensive and investments in them are long-term investments. The functioning of the markets, legislation and predictability of such markets and legislation are influential considerations to investments in electricity production facilities on a commercial basis.

The most important legislative development in Finland pertaining to renewable energy took place in June 2018 by the amendment of the Finnish Act on Production Subsidy for Electricity Produced from Renewable Energy Sources (1396/2010, Fi: laki uusiutuvilla energialähteillä tuotetun sähkön tuotantotuesta), which implemented a new support scheme for renewable energy based on technology-neutral premium based tender process.

The Act adopts a new tendering system for renewable energy subsidies. Unlike in the previous feed-in tariff system, under the new auction-based tendering system the state will define the annual target amount of renewable energy for each tendering round, and eligible electricity producers will then file their bids with the Finnish Energy Authority.

During each tendering round, the producers must determine the premiums (i.e. the amount of support from the state) they require for producing energy and the predicted annual volume of their energy production. The projects will then be ranked based on the bids, and those with the lowest premium rates will be accepted in ascending order until the annual target amount of renewable energy production is reached. The premium offered would have to fall under the threshold price of the process, which to start with is EUR 53.5 per MWh, i.e. the same as under the current feed-in tariff system. The state will grant premiums for the accepted projects for a maximum period of 12 years.

The first (and so far the only) auction round took place between 15 November and 31 December 2018. The annual electricity production available for auction was 1.4 TWh. 

The principal legal framework regarding energy markets consists of the Act on Electricity Markets and the Act on Natural Gas Markets.

Corporate PPAs:

Corporate power purchase agreements (PPAs) for renewable energy have only recently entered the Finnish renewable energy market. This results from the fact that while the installed capacity of wind energy has doubled within two years to roughly 2,000 MW in Finland in 2018, a majority of these wind energy investments were made with the support of state aid from the previous feed-in tariff scheme, which was closed at the end of 2017.

Registration and reporting obligations under REMIT:

Undertakings active in the electricity sector are preparing for registration and reporting obligations under REMIT to enter into force gradually in force in Finland. Registration and reporting obligations, as well as ensuring compliance with several partially overlapping regulatory regimes (REMIT, financial regulation, competition law), increase the administrative burden and costs of numerous undertakings active in the sector.

Currently, it is hard to anticipate the exact effects of the REMIT regime in Finland and on the Nordic electricity markets, and much will also depend on the actual activity of the Energy Authority, Financial Supervisory Authority and their cooperation with other relevant domestic and supranational authorities. 

 

Telecoms infrastructure

The telecoms markets are heavily regulated and certain activities are subject to permits (eg network permits) from the FICORA. However, FICORA actively intervenes in competition problems detected on the broadband and telephone markets, which enables new and innovative service providers to enter the markets.

The principal legal framework consists of the Information Society Code, which regulates most parts of the field.

Transport infrastructure

There is an ongoing legislation project to implement a new Traffic Code, which will also affect the legal framework regarding transportation more generally.

In Finland, the rail passenger market is not yet open to competition and VR is the only train operating company in Finland. The tracks however, are the responsibility of the Finnish Transport Agency who procures the planning, building and maintenance from companies in the field. VR Tracks is the principal actor in the market. The rail freight market is open to competition.

Maintenance of the roads is on the responsibility of the government. The public sector usually procures services for road projects from private sector entities, who carry out the projects. However, these actions are not outsourced.

There is no specific regime governing or restricting investment in energy or infrastructure projects in France, subject to:

• antitrust clearance;
• prior authorization of the Minister of the Economy in case of foreign investments in activities in relation to materials, products or performance of services, including activities in relation to the safety and well-functioning of the installations and equipment, essentials to the guarantee of the country's interest on public policy, public security or national defense (eg supplying electricity, gas or public health); and
• any planning or environmental authorizations (building permits, classified installations for the protection of environment (ICPE) etc) or licenses to be applied for and/or any relevant land rights arrangements (long-term lease, easement etc) to be concluded by the SPV.

Energy and infrastructure markets in Germany are highly regulated by European and national legislation and also by decisions of the German regulatory authority, the German Federal Network Agency (Bundesnetzagentur). This especially holds true for the operation of electricity or gas networks. In particular, network operators are not entitled to freely determine tariffs for the transportation of energy but need to comply with regulatory requirements relating to tariffs (which will, however, still provide for considerable incentives for investments). Accordingly, investors will need to have a good understanding of the applicable regulatory framework and, due to regularly changes to the regulatory framework, will also need to take into account potential directions in which the market may move.

Investors will also need to be aware that energy markets are subject to a complex system of contractual arrangements between generators/producers/importers, suppliers, purchasers, network and storage operators and also the relevant person conducting balancing services for the injection of energy in the network and the withdrawal from the network. The contractual agreements in relation to network access are highly regulated and therefore will generally not leave much room for negotiation between market participants.

Furthermore, under European and national unbundling provisions effective separations of networks from activities of generation/production and supply of energy are required in order to avoid discriminatory effects. Accordingly, where an investor is already active in the area of generation/production or supply, he will only be able to invest in network facilities in compliance with strict unbundling provisions and vice versa.

Various other regulatory provisions and limitations exist for other infrastructure assets, such as telecom assets or roads.

Where essential security interests of the Federal Republic of Germany would be affected by the acquisition of the shares of a German entity or infrastructure assets, a foreign investor would also need to take into account statutory requirements under the German Federal Act on Foreign Trade (Außenwirtschaftsgesetz – AWG). In particular, such acquisition may be subject to notification requirements and the objection of German authorities.

Minimum equity capital contribution

Generally, under the Ghana Investment Promotion Centre Act, in a joint venture between a Ghanaian and a foreign shareholder, the foreign shareholder is required to make a minimum equity capital contribution of USD200,000. A wholly foreign owned venture requires a minimum equity capital contribution of USD500,000.

Energy

Electricity ownership

The Energy Commission (Local Content and Local Participation) (Electricity Supply Industry) Regulations, 2017 (L.I. 2354) prescribes local content and local participation levels applicable to persons engaged or intending to engage in the electricity supply industry. LI 2354 is aimed at achieving a long-term goal of minimum local content of 60% and local participation of 51% in the electricity supply industry.

Licensing

A public utility requires a license from the Energy Commission for the transmission, wholesale supply, distribution or sale of electricity.

Oil and Gas

Ownership

The right to develop oil and natural gas reserves is granted through a petroleum agreement between the Minister responsible for Petroleum acting on behalf of Ghana, the Ghana National Petroleum Corporation (GNPC) and the investor who should be a body corporate. The GNPC is entitled to a 15% initial participating carried interest in all petroleum exploration and development operations and may acquire an additional participating interest which may be for a specified period and shall be a paying interest in respect of costs incurred in the conduct of petroleum activities other than exploration costs.

To qualify to enter into a petroleum agreement or be granted a petroleum license, there must be at least 5% equity participation of an indigenous Ghanaian company other than the GNPC. Again, a non-indigenous company which intends to provide goods or services to a contractor, a subcontractor, or a licensee in Ghana is required to establish a joint venture company with an indigenous Ghanaian company and afford it an equity participation of at least 10%.

Prior written consent of the Minister for Energy is required for the assignment of interests in a petroleum agreement.

In relation to downstream petroleum activities, a license holder is required to have at least 50% Ghanaian ownership.

Licensing

A permit is required from the Petroleum Commission to install and operate any facility for the purpose of transporting, treating and storing petroleum.

In the midstream sector, the prior written approval of the Energy Commission must be obtained in order to commence the construction, installation, operation or modification of a pipeline.

A license is required from the Energy Commission for the transmission, wholesale supply or distribution of natural gas.

A license is required from the National Petroleum Authority to engage in a business or commercial activity in the downstream industry including importation, exportation, re-exportation and shipment of crude oil, gasoline, diesel, liquefied petroleum gas, kerosene and other designated petroleum products.

Telecommunications

A person who operates a public electronic communications service or network or provides a voice telephony service requires a license from the NCA. 

A person who has a significant interest in a network operator, service provider or the holder of a frequency authorization is prohibited from selling, transferring, charging or otherwise disposing of that interest or any part of that interest, unless notice is given to the NCA 30 days before the proposed transaction. 

Holders of frequency authorizations, network operators or service providers are required to give prior notice to the NCA of the (a) sale, transfer, charge or other disposition of a significant interest, (b) issuance or allotment of any shares or any other reorganization of their share capital that would result in: (i) a person acquiring a significant interest or (ii) a person who already owns or holds a significant interest, increasing or decreasing the size of that person's interest. 

A person who acquires a significant interest in a network operator or service provider is required to notify the NCA within 14 days of the acquisition except where the sale is as a result of an internal reorganization of a network operator or service provider. 

The prior written approval of the NCA is required for the assignment of the license of a network operator or network provider or a frequency authorization. 

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Hungary over and above existing regulation for investors and funders more generally however, a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and whether there are any contractual restrictions on change of control, in respect of an existing/operational project. This is less of a concern for private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in Hungary have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customers and the MAVIR Magyar Villamosenergia-ipari Átviteli Rendszerirányító Zrt. (the Hungarian transmission system operator) which are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how developments in technology may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under Act C of 2003 on Electronic Communications and other applicable legislation and how The National Media and Infocommunications Authority (NMHH) grants rights to access private or public land in order to install and maintain essential equipment in, over or under that land. This equipment might be cables sunk beneath the ground or a mobile mast sited on the ground.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework to consider in respect of a practical and operational involvement in this sector. Key areas include understanding the regulatory regime for certification for train use and acceptance and user fare regulation. Depending on how an investor wishes to invest in a project (specifically what type of entity or asset), there is a varying degree of difficulty for investors to enter into an existing project.

Roads

In order for a private sector partner to carry out its duties on certain types of roads projects, the procuring public sector authority may delegate certain of its statutory duties to the private sector partner. This will be dependent on the project and the specific contractual requirements. Any investor will, therefore, need to understand those duties and whether it is able to subcontract those duties to an appropriate person.

There are no special rules nor any specific regime governing or restricting investment in energy or infrastructure projects in Ireland, over and above existing regulation for investors and funders more generally. However, depending on the sector involved, investment may be subject to legislative or regulatory control (e.g. merger control and state aid rules).

With regard to the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land may require planning permission and a project may require environmental permits and/or other sector specific regulatory consents or licenses.

If a public body (e.g. a government department or local authority) is procuring a project and the public body is to benefit from central government funding towards the cost, the project will be subject to governmental approval. Key sector-specific issues are flagged in the sections below.

Energy Infrastructure

The CRU has responsibility to grant, revoke and enforce licenses for the purposes of supplying electricity. Application forms can be downloaded and submitted directly to the CRU. Prospective suppliers must fulfil a number of industry requirements as set down by ESB Networks (responsible for market design) and the Single Electricity Market Operator (SEMO), as facilitator of the continuous operation and administration of the SEM.

Following the grant of a license, licensees may request consent from the CRU for subsequent actions such as an assignment and transfer, change of control, extensions and revocation.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, it should be considered if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms Infrastructure

ComReg is the independent regulatory authority that regulates the telecoms sector and it is the designated national regulatory authority under the European common regulatory framework for electronic communications networks and services. It has extensive powers, which include to:

• issue licenses to provide telephony services;
• conduct market reviews and impose obligations on operators found to have significant market power; and
• enforce compliance and resolve disputes between operators and between operators and their customers (including commercial disputes).

Following a review by the European Commission of the regulatory framework for electronic communications, the European Electronic Communications Code (the EECC) entered into force in December 2018. Ireland has until December 21, 2020, to implement the directive into national law. The adoption of the EECC marks a significant revision of the EU framework for telecoms regulation. It operates to consolidate and update the existing EU legislation regulating electronic communications services and networks. The core objectives of the EECC are to promote connectivity to high capacity networks across the EU, develop an internal market for telecoms, and provide greater protection for consumers.

The broad inclusion of interpersonal communication services within the scope of an electronic communication service will mean that telecom companies outside the scope of the regulatory regime at present will have to consider, among other things, their obligations under the EECC and adapt as needed.

No foreign ownership restrictions apply to communications services.

Transport infrastructure

The National Transport Authority (the NTA) is responsible for issuing licenses for public passenger services. The application can be downloaded from and submitted through the NTA's website and a completed map of the proposed route is required (among other things) to be submitted with the application.

Any attempt to provide a transport service without having obtained a license is a contravention of the Public Transport Regulation Act, 2009.

Planning and building control

When buying or leasing a property in Ireland, it is important to obtain satisfactory evidence of compliance with planning permission and building regulations regarding the construction of the property and any significant post-construction works.

With the exception of certain specified changes of use and limited forms of development which are exempted, permission must be obtained from the relevant local authority and/or An Bord Pleanála in order to make any material change of use of property or to construct buildings.

Unlike in the UK, there is no statutory planning register which can be checked to verify that a building has been constructed in accordance with the relevant planning permission(s).

Building control regulations regulate the design and construction of buildings, extensions or certain material change of use, their services, fittings and equipment. They deal with, among other things, accessibility, health, safety and welfare of users, and energy efficiency.

Fire Safety Certificates and Disability Access Certificates must be obtained from the Building Control Authority in respect of the design of works before commencement. Once the relevant works have been completed the developer must obtain a Certificate of Compliance on Completion from an Assigned Certifier in order to verify that the works comply with building regulations. This certificate must then be registered with the national Building Control Management System.

Energy

There are no particular limitations to the investment by foreign entities in Italian energy assets. However, the supply, generation, transmission and distribution of energy are heavily regulated sectors. Permitting, concessions and subsidies regimes evolve quickly and any investors will need to have a good understanding of both the current framework and the potential directions in which the legal framework and the market may move.

It is also to be considered whether the acquisition of any interests in the energy sector would cause any issues with any concessions, licenses, permits or agreements with public authorities.

Infrastructure

There are no particular limitations to the investments by European entities in Italian infrastructure assets. Potential investors coming from outside the EU may face more difficulties and barriers to entry due to less harmonized legislative systems.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in the Ivory Coast over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (e.g. merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (e.g. a government department, a local authority or a National Health Service Trust) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public-sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on Change of Control. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

Electricity

The electricity industry is managed the Ivorian Electricity Company (CIE) which is by the state company. It is responsible for the distribution of electricity.

There are also independent power producers such as the Ivorian Electricity Production Company (CIPREL), AZITO Energy, AGGREKO.

In its efforts to encourage private investment, a liberalization of the sector regulations has been undertaken. Private producers have been part of the electricity generation process since 1985; however, production, transmission and distribution were left under state of monopoly, with these activities being managed by CIE since 1990.

With the adoption of a new Electricity Code in 2014, CIE’s monopoly on transmission, distribution and marketing of electricity was terminated

Power generation is currently reliant to a significant degree on independent power producers (IPPs).

Generally

There is no specific regulatory regime governing or restricting investment in energy or infrastructure projects in Japan over and above existing regulations for investors and funders more generally. However, a particular investment may be subject to legislative or regulatory control. For instance, foreign investors should comply with foreign exchange legislation under which foreign investment in certain business sectors (including electricity, gas, heat supply and telecommunications) requires a prior notification to enable authorities to determine whether such investment will be permitted. Further conditions relating to planning and implementation may require co-ordination with authorities.

Energy

The Electricity Business Act is the main legislation regulating businesses involved in the generation, transmission, distribution and sale of electric power. An electric business operator is required to obtain a business license or register with a competent authority, or may be required to file a notification prior to commencing operations. As for the business of distribution and sale of electric power, based on the amendments to the Electricity Business Act that became effective as of 1 April 2016, all business operators are able to engage in such business subject to registration, in contrast to the monopoly of the transmission business by certain utility companies. The operator of a power plant is required to meet certain technical requirements.

The Atomic Energy Fundamental Act, the Act on Compensation for Nuclear Damage and other specialized regulations govern the production and supply of nuclear power. A company which intends to have a power-generating nuclear reactor is required to obtain a business license from the Nuclear Energy Council and to maintain its facilities to meet certain technical requirements.

The Gas Business Act is the primary legislation regulating businesses involved in liquefied natural gas (LNG). The primary legislation regulating businesses involving liquefied petroleum gas (LPG) is the Act on Securing the Safety and Optimization of Transactions of Liquefied Petroleum Gas (the LPG Act). The LNG or LPG business operator is required to obtain the relevant business license or register with a competent authority prior to starting its business. The amendments to the Gas Business Act, that became effective as of 1 April 2017, enable all business operators to engage in the distribution and sale business involving LNG subject to registration, as is the case for business involving LPG (in contrast to the monopoly of transmission business involving LNG by certain utility companies). The LNG or LPG business operator is required to have appropriate safety regulations in place and submit those regulations to the competent authority.

 

Telecoms infrastructure

The Telecommunications Business Act is the primary legislation regulating businesses involved in telecommunications. A telecommunications business operator is required to obtain a business license and may be required to file a notification prior to starting its business. Television broadcasting is primarily governed by the Broadcast Act.

Transport infrastructure

The railway industry is primarily governed by the Railway Business Act. A railway business operator is required to obtain a business license. Railway operations are subject to government inspections, for instance, to ensure compliance with safety regulations.

Other infrastructure

The operation of schools is primarily regulated under the School Education Act, the National University Corporation Act and the Private Schools Act. An operator of a private school is required to obtain prior government approval.

There are no overall domestic restrictions, except in relation to certain utilities. Obligations resulting from anti-money laundering legislation and regulations should also be taken into account.

Luxembourg has an open policy towards foreign investments, promoted by means of, inter alia, grants of subsides.

Luxembourg is part of the Belgo-Luxembourg Economic Union which mainly aims at supporting, stimulating and protecting investments. It has signed some 100 bilateral investment treaties with various states around the world which generally create a legal and regulatory framework preventing protectionism with respect to foreign investments.

No governmental approvals are required for project finance transactions. However, a business license may be required if the activity in Luxembourg goes beyond the pure financing of the project and involves carrying out commercial activities in Luxembourg. In such case, a business license must be sought from the Direction Générale PME et Entrepreunariat.

Public procurements are regulated.

There are no special rules for investing in energy and infrastructure, but each project may be subject to regulations and restrictions, for example an Environmental Impact Assessment (EIA) license may be required for certain activities¹. The application fee for an EIA license is MUR15,000 (approximately USD400).

¹An exhaustive list of undertakings requiring an Environmental Impact Assessment can be found in Part B of the Environment Protection Act 2002. 

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Mexico over and above existing regulation for investors and lenders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules) and/or foreign investment restrictions. As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered, including environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘change of control’. This is less of a concern with private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

Private investors can participate, alongside PEMEX and CFE, the two large state-owned enterprises, in a wide range of the energy industry value chain, attracting capital and technology to areas that are in need of renewal. A cornerstone of the energy reform is the objective to open the energy sector to private and international investment by ending the monopolies of state-affiliated enterprises.

The energy reform has opened five ways in which private investors can take part in the development of Mexico’s oil and gas resources, in all cases after pre-qualification and taking part in a bidding process conducted by the Comisión Nacional de Hidrocarburos (CNH), except that service contracts can be agreed directly with PEMEX:

• License contracts allow a company to book ownership of oil or gas assets (for financial purposes) at the wellhead after it has paid its tax dues, with the company paying a signing bonus, payments during exploration and royalties on production.
• Production-sharing contracts allow a company to recover costs and a share of the operating profit, received as a portion of the oil or gas extracted.
• Profit-sharing contracts allow a company to recover costs and a share of the profit, after it has marketed and sold the resource.
• Under service contracts a company is paid for specified project activities on behalf of PEMEX or the state.
• Farm-outs/migrations allow a company to enter into a joint venture agreement with PEMEX in a project that has already seen exploration and production efforts.

The public transmission and distribution of electric energy is still reserved to the state, provided by CFE and overseen by the new regulatory body, the National Energy Control Centre (Centro Nacional de Control de Energía) (CENACE). CENACE is the operator of the national electric system and wholesale market operator, however, CENACE can authorize private parties to participate in energy distribution. To incentivize investment in renewables, the government has introduced clean energy certificates, a market instrument that is part of broader power sector reform designed to support the share of electricity consumption to be generated from clean energy sources. The revenue from the sale of certificates, which are purchased by producers and large electricity consumers, is intended to be invested in other renewable energy projects.

Telecoms infrastructure

Foreign investment is authorized with no restriction for telecommunications and satellite communications and up to 49% for radio broadcasting services.

The Federal Institute of Telecommunications (IFETEL) was created by virtue of the Telecommunications Reform as an independent regulator with the authority, among other matters, to award and revoke concessions, guarantee economic competition in the telecommunications and broadcasting markets, and determine the existence of ‘dominant carriers’ (participants with market participation above 50% in both the broadcasting and telecommunications sector) to whom asymmetric regulation is to be applied (currently, America Móvil in telecommunications and Televisa in broadcasting, have been deemed ‘dominant carriers’ by IFETEL).

Transport infrastructure

Domestic passenger, tourism and freight transportation

Pursuant to the Foreign Investment Law, activities such as domestic passenger, tourism and freight transportation (except for messenger or package delivery services) is restricted to Mexican individuals or Mexican companies without allowing foreign investment (a neutral investment mechanism may be implemented to allow foreign investment where limited voting shares are issued to foreign investors).

Aviation

Pursuant to the Foreign Investment Law, domestic air transportation services are subject to a foreign investment limit of 25%. The concessions and permits are granted pursuant to the Civil Aviation Law. Other foreign investment limitations apply.

Shipping

Pursuant to the Foreign Investment Law, national commercial freight shipping lines and port administration are activities subject to a foreign investment limit of 49% (a neutral investment mechanism may be implemented to allow foreign investment where limited voting shares are issued to foreign investors). Other foreign investment limitations apply.

Rail

The Mexican government allows foreign investors to participate with up to 49% of the capital stock in companies providing railway service. Railroad activity with more than 49% foreign participation requires prior authorization from the Foreign Investment Commission.

Other infrastructure

On publicly procured infrastructure, it is quite common for long-term projects to have a ‘change of control’ clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post construction provided any change in control is not to an ‘unsuitable third party’. How strict these restrictions are will often depend on the sector.

There are no specific regulations applicable to investments in energy and infrastructure in Morocco, subject to antitrust clearance.

The State also encourages investors to invest in the energy sector.

Depending on the projects under consideration, prior authorisation from the relevant authorities should be obtained.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in the Netherlands over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered.

For example, a project involving development on land will require planning permission and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘change of control’. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in the Netherlands have a complex system of arrangements between suppliers, generators, transmission and distribution, which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanisms with suppliers, customers and TenneT and these are subject to change/regular updates meaning that investors must have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable. This is particularly relevant in relation to the SDE+ subsidies, which may be essential to ensure that sustainable power production can occur while being price competitive but whose conditions set strict requirements in relation to change of control particularly in the early stages of projects.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under the Telecommunications Act. The rights required to access private or public land in order to install and maintain essential equipment in, over or under that land should also be considered carefully. This equipment might be cables sunk beneath the ground or a mobile mast sited on the ground.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Roads

For certain types of road projects, procuring public sector authorities (ie central government or a local authority) may delegate certain of their duties to private sector partners. Investors assuming such duties will, therefore, need to understand the nature and extent of the duties they are assuming and whether they are able to subcontract these duties to an appropriate person. There is usually a restriction on the change of control of a private sector partner during the construction period. Following the construction period, the private sector may be allowed a change of control subject to certain restrictions. The precise scope of the restrictions will depend on the contractual terms.

Other infrastructure

On publicly-procured infrastructure, it is quite common for long-term projects to have a ‘change in control’ clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period, but this is often relaxed subject to certain restrictions. How strict these restrictions are will often depend on the sector. For example, the defense sector usually gives the Ministry of Defense a strong degree of discretion (particularly on the grounds of national security) as to whether to accept a change in control over its private sector partner.

Generally

New Zealand has an open economy which operates on free market principles. New Zealand maintains specific foreign investment restrictions in only a few areas of critical interest. There are no specific restrictions on foreign direct investment in the energy and infrastructure industries. Overseas persons investing in New Zealand energy and infrastructure assets or businesses must:

• comply in all respects with the general law of New Zealand in the same way as a New Zealand investor; and
• if applicable, apply for and receive consent from the Overseas Investment Office (OIO) in respect of the particular investment.

Overseas investments in New Zealand assets are screened if they are defined as 'sensitive' within the Overseas Investment Act 2005. Three broad classes of asset are currently defined as sensitive within the Act: acquisition of a 25% or more ownership interest in business assets valued at over NZD100 million, all fishing quota investments, and investment in 'sensitive land' as defined in Schedule One of the Act. Examples of sensitive land include: residential land, rural land over five hectares; or land bordering or containing foreshore, seabed, river or the bed of a lake. 

Proposed investments must meet certain statutory criteria before requiring OIO consent. Once met, this will usually require investors to show their business experience, that they are of good character and, for sensitive land, demonstrate the benefits to New Zealand of their investment.

Investors who need OIO consent:

• generally do not have New Zealand citizenship or are persons who are not ordinarily resident in New Zealand;
• are entities, such as companies, trusts and joint ventures, with more than 25% overseas ownership or control; and
• can include associates (including New Zealanders) of overseas investors.

The most effective way for an overseas person to invest in New Zealand will depend upon practical matters relating to the nature of the investment and the resulting tax consequences in New Zealand and elsewhere.

Overseas persons generally undertake business in New Zealand by:

• incorporating a local company as the subsidiary of an overseas company;
• registering a branch of an overseas company in New Zealand; or
• establishing a joint venture or partnership.

Subject to tax and anti-money laundering reviews, there are no specific restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. Other than under the terms of any OIO consent, no additional performance measures are imposed on foreign-owned enterprises.

Energy

The energy markets in New Zealand are heavily regulated by the Electricity Authority, the Gas Industry Company and the Commerce Commission. Securing licenses and consents to develop certain natural resources may trigger a process which requires consultation with local iwi (Maori tribes).

Although a central body manages the electricity market, electricity generation is separated from electricity distribution. Transpower, a state-owned enterprise, owns and operates the entire transmission infrastructure. Electricity generators cannot transmit electricity unless directly to a customer. Distributors enter into transmission agreements with Transpower, as prescribed by the Electricity Industry Participation Code. This code also provides for the processes by which purchasers and generators submit and revise bids and offers for electricity.

The majority of electricity in New Zealand is generated through hydroelectric dams. There is increasing pressure on the country's freshwater resources, resulting in the Land and Water Forum making ongoing recommendations to the government about freshwater management and preservation. Government implementation of these recommendations will influence the allocation of freshwater for electricity generation.

Geothermal energy is an emerging industry governed by unusual rules. No individual or business can own a geothermal resource, but consents can be awarded for development and use under the Resource Management Act 1991. There is no licensing regime under which rights to investigate geothermal resources can be secured.

The oil industry is regulated by New Zealand Petroleum and Minerals. The government has rights to all oil in New Zealand and in the country's Exclusive Economic Zone. The Crown Minerals Act 1991 and its related regulations governs the allocation rights to oil resources.

Telecoms infrastructure

The telecommunications industry is essentially separated into network owners, who own the  infrastructure (including fixed line and fibre), and retail service providers, who purchase wholesale broadband and voice services from network owners to on-sell to consumers. The wholesale price that network owners can charge to retail services providers is controlled by the Commerce Commission. Due to 'unbundling' of local loop infrastructure (cabling which connects an exchange to an end consumer), retail service providers are also able to install their own infrastructure in exchanges, giving them more control over the quality of their service.

There is some regulation in place to support new mobile service providers. However, retail service providers looking to enter the market face limited choices when looking for commercial agreements for roaming and co-location on mobile towers. Competition regulations do not impose price controls on owners of mobile infrastructure. The Commerce Commission undertook a mobile market study in 2019.

Transport infrastructure

Opportunities exist for investment in transport infrastructure through the government's Public-Private Partnership (PPP) program. There are currently two major transport PPPs underway for the construction of major expressways. A PPP is one option for the light rail project proposed for Auckland and it is expected that further projects will be identified as the Infrastructure PlanCommission develops a 30 year infrastructure plan.

Generally

No, but the ownership and/or operation (or related activities) is generally subject to special authorizations and Government concessions.

Energy

Special regulations and restrictions apply to investments into 'large' hydropower assets (above 10MW).

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Peru over and above existing regulation for investors and funders, but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules in case of energy investments). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order, and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (eg a government department, a local authority or a competent ministry of the corresponding sector) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public-sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘change of control’. This is less of a concern on private sector infrastructure projects although investors would need to consider whether the validity of any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in Peru have a complex system of arrangements between suppliers, generators, transmission and distribution in place, and are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customers, the Ministry of Energy and Mines, and OSINERGMIN. These arrangements are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies, particularly, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Further, investors should consider that obtaining licenses is not enough to guarantee the development of energy projects in certain areas. One major issue is to guarantee the ‘Rights of Way’ for the projects without generating a social problem by affecting property rights of third parties. In most of the cases getting along with the communities located around the project is as important as obtaining the relevant licenses and permits.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under the Legislative Decree 1019 – Law of Access to Infrastructure of Public Telecommunications Services and Access to Infrastructure regulations (Decreto Legislativo 1019 – Ley de Acceso a la Infraestructura de los Proveedores Importantes de Servicios Públicos de Telecomunicaciones) regarding access to infrastructure and how the Ministry of Transportation and Communications grants rights to access private or public land in order to install and maintain essential equipment in, over or under that land. This equipment might be cables sunk beneath the ground or a mobile mast sited on the ground. The Supervisory Authority for Private Investment in Telecommunications (OSIPTEL) is the regulator of the telecommunications sector in Peru and it is responsible for the following: rates applicable to users; competition in the sector; interconnection; quality of the service; settlement of disputes between operators and application of the corresponding penalties; and dealing with complaints from users.

The industry is largely privatized; therefore, investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is a framework to consider in respect of parties' practical and operational involvement in this sector. Key issues for parties seeking to become involved in rail infrastructure include developing an understanding of the regulatory regime for certification for train use and acceptance and user fare regulation. Depending on how an investor wishes to invest in a project (specifically, depending on the type of entity or asset involved), there are varying degrees of difficulty for investors to contend with, particularly when entering into existing projects.

Roads

In order for a private sector partner to carry out its duties on certain types of roads projects, the procuring public sector authority (Ministry of Transport and Communications or a local authority) may delegate certain of its statutory duties to the private sector partner. This will be dependent on the project and the specific contractual requirements. Any investor will, therefore, need to understand those duties and whether it is able to subcontract those duties to an appropriate person. There is usually a restriction on the change of control of the private sector partner during the construction period. Following the construction period, the relevant private sector partner may be allowed a change of control only with the prior approval of the Ministry of Transport and Communications or local authority. The precise scope of the restrictions will depend on the contractual terms of the project.

Other infrastructure

On publicly procured infrastructure, it is quite common for long-term projects to have a ‘change of control’ clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post-construction. How strict these restrictions are will often depend on the sector. For example, the defense sector usually gives the Ministry of Defense a strong degree of discretion (particularly on the grounds of national security) as to whether to accept a change in control over its private sector partner.

Generally

There is a specific regime governing and restricting investment in energy or infrastructure projects in Poland. In some cases, the relevant minister can block the buying or selling of some class of assets or companies on the grounds of an overriding public interest such as public security. Some companies that own infrastructure assets are also obligated to perform some activities connected with public security, such as preparing emergency plans.

Energy and infrastructure investments may be subject to legislative or regulatory control, such as merger control rules.

As regards the planning and implementation of the underlying energy or infrastructure project (in which an investment is to be made), the legal or regulatory position relevant to the project must be considered. For example, a project involving development on land will require planning permission or a development consent order. Additionally, a project may require environmental authorizations, permits and/or sector-specific regulatory consent decisions or licenses. Environmental impact assessments may also be required.

Energy

The energy market in Poland has a complex and heavily regulated system of arrangements between suppliers, generators, transmitters and distributors. In particular, there are complex arrangements in respect of licencing, subsidies, and demand/charging mechanisms with suppliers, customers and the grid operator. These are subject to change and regular updates, which means that investors need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how changes in technology may impact the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license that might make the potential target less attractive or viable. In Poland, unbundling and Third Party Access (TPA) principles are in force.

There are public policy mechanisms (adopted through legislation) which are used to incentivize investment in distribution and generation, especially in renewable energy sources.

Other infrastructure

There are specific sectoral provisions concerning other infrastructure. The relevant provisions depend on the specific project.

Telecommunications and transport infrastructure are especially heavily regulated, mostly by sectoral acts like the Telecommunications Law and the Rail Transport Act. For example, there is a complex regulatory environment in the telecommunications sector including issues such as access and interconnectors. The industry is largely in private hands, therefore investors should consider if any permits, consent decisions or licenses will be affected by their interest. The rail sector also has an extensive and complex regulatory framework with respect to practical and operational issues. Key areas include certification for train use and fare regulation. Depending on how an investor wishes to invest in a project (specifically, what type of entity or asset), there is a varying degree of difficulty in entering into an existing project.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Portugal over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). With regard to the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered.

Energy

The energy markets in Portugal have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers and customer and these are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

The industry is largely privatized; therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport and other infrastructure

Depending on the business activity, the investors should consider if any permits/consents/licenses will be affected by their interest.

Since the Commonwealth of Puerto Rico no longer has access to the world capital markets, the government is relying on public-private partnerships (P3) to put forward energy and infrastructure projects. Therefore investing in these projects is through the procurement of P3 projects. That procurement is pursuant to the Puerto Rico Public-Private Partnership Act of 2009, as amended (P3 Act). The P3 Act expressly states that it is the public policy of the Commonwealth of Puerto Rico to favor and promote the establishment of P3s and further authorizes all departments, agencies, public corporations, and instrumentalities, as well as municipalities and the legislative and judicial branches of the Commonwealth of Puerto Rico, to use the establishment of P3s in accordance with the process specified therein. The P3 Act also establishes that the Commonwealth of Puerto Rico shall not legislate to limit the powers or rights granted to the Puerto Rico Public-Private Partnership Authority (Authority) and partnering government entities under the P3 Act until the obligations under an executed P3 contract are satisfied. The P3 Act also sets out the areas where P3s are expressly authorized as a matter of policy. These are defined as ‘Priority Projects.’

The Priority Projects are:

• the development, construction or operation of sanitary landfill systems, including methane recovery operations, as well as facilities for the management and disposal of non-hazardous and hazardous solid waste, such as plants for recycling, composting and converting waste into energy;
• the construction, operation or maintenance of reservoirs and dams, including any infrastructure necessary for their operation to produce, treat, and distribute water and any infrastructure for the production of hydroelectric energy and for sewage and potable water treatment plants;
• the construction, operation or maintenance of existing or new plants for the production of energy;
• the construction operation or maintenance of transportation systems of any kind, thorough a fare system or related infrastructure;
• the construction, operation or maintenance of educational, health, security, correctional and rehabilitation facilities. It is worth noting that when operating educational facilities, a P3 may only be established if the contract is executed with a worker-owned cooperative, a special employee-owned corporation or a nonprofit entity;
• the construction, operation or maintenance of affordable housing projects;
• the construction, operation or maintenance of sports, recreational, tourist and cultural entertainment facilities;
• the construction, operation or maintenance of wired or wireless communication networks for communications infrastructure of any kind;
• the design, construction, operation or maintenance of high technology, computer and automation systems; and
• the construction, operation or maintenance of any kind of activity or facility or service as may be identified from time to time as a Priority Project through legislation.

Legal framework

The existence of the P3 Act and its regulation provide clarity, uniformity, and boundaries to the P3 selection process and contracting, underscoring the strength of Puerto Rico as a jurisdiction with certainty with respect to the legal framework for the development of P3s. Of particular significance are the following aspects of the P3 Act and Puerto Rico’s legal system.

P3 contracts

The P3 Act broadly allows for creation of P3s, providing that P3 contracts may be design-build; design-build-operate; design-build-finance-operate; design-build-transfer-operate; design-build-operate-transfer; turnkey; long-term lease; surface right; administrative grant; joint venture; long-term administration and operation; and/or any other kind of agreement that separates or combines the design, building, financing, operation or maintenance phases of the so called Priority Projects. Furthermore, the P3 Act is clear about certain required clauses in a P3 contract, possible clauses to be negotiated between the parties and boundaries with respect to other clauses. The P3 Act even discusses the issue of the possible transfer of public employees to the P3 entity when the government partner benefitting from the P3 is in a precarious fiscal condition. The P3 contracts may have an initial maximum term of 50 years and may be extended for an additional 25 years (75 years total) provided certain conditions are met.

Confidentiality

The P3 Act establishes a balance between information that has to be disclosed publicly and confidential information. It provides for ways of protecting certain privileged or protected information disclosed by proponents to the Authority as a part of the P3 procurement process. The proponents shall have the duty of identifying the information that the proponent considers confidential and, when presenting the proposal, request confidential treatment. The Authority will evaluate the requested confidential treatment in accordance with the procedure established in the P3 Act and in the Regulation and then make a determination regarding the same; if it constitutes a trade secret, proprietary information or privileged/confidential information, all such information shall be protected. Also, Act 80 of 2011, known as the Trade Secrets Act of Puerto Rico, follows the Uniform Trade Secrets Act which classifies a trade secret as any confidential information that has economic value or that provides commercial advantage and is under reasonable security measures.

Taxes

The P3 Act provides property tax exemptions for facilities subject to a P3 contract and any property used exclusively in, or for, the facility subject to the P3 contract if it is acquired, built or owned by the partnering government entity and is made available to the operator. The private partner may enter into agreements with municipalities to establish exemptions from municipal license fees, excise taxes or municipal taxes. In addition, the private partner, whether classified as a corporation or as flow-through entity for PR income tax purposes, is subject to a fixed preferential income tax rate of 1020% over the net income derived from the operations provided in the P3 contract, in lieu of any other income taxes imposed by the PR Internal Revenue Code of 2011, as amended (“PR-IRC”). Distributions of the net profits derived from the operations provided in the P3 contract to the shareholders, members or partners, as the case may be, of the private partner are not subject to further taxation in Puerto Rico.

In Romania there are no specific regulations permitting or restricting investments in energy or infrastructure. Depending on the type of investment and the area in which such is envisaged to be made, various legal provisions may be applicable throughout the various stages of the investment, for example:

• corporate and civil law provisions applicable with respect to the setting-up of the investment vehicle, acquisition/sale of control in the investment vehicle, joint ventures etc;
• public procurement regulations in case of investments undertaken by public authorities or certain types of companies (such as energy-producing companies), which regulate aspects such as initiation of the investment, procurement of works, products and services related to the investment etc;
• legislation regarding European funds or state aid schemes, to the extent these are used for the funding of the investment; and
• general regulatory provisions related to design, construction, commissioning and operation of an investment project, including construction provisions, environmental provisions etc.

Special regulatory provisions are applicable for each category of project in energy (eg electricity, nuclear and thermal energy production investment projects) or infrastructure (telecommunications, railway and road infrastructure investment projects).

Generally

In addition to the general methods of investing, there are also two special legal regimes in Russia that may be used for investments in energy and infrastructure.

A significant part of the investment in energy and infrastructure takes the form of public-private partnerships (PPPs). A PPP project is generally achieved through a long-term agreement between the public sector and the private sector to deliver a service traditionally provided by the public sector. Federal Law 'On Public Private Partnership, Municipal Private Partnership in the Russian Federation and Amendments to Certain Legal Acts of the Russian Federation' (PPP Law) applies to numerous types of infrastructure including, among others, roads, railways, pipelines, sea ports, airports, healthcare and education facilities. The PPP Law specifies essential elements of PPP agreements, tender and selection procedure and certain guarantees for the investors.

Another option is a concession agreement under Federal Law 'On Concession Agreements' (Concession Law). The Concession Law applies to various types of infrastructure, which are nearly the same as in the PPP Law (including, among others, roads, railways, pipelines, sea ports, airports, communal services, and various cultural, education, healthcare, sporting and tourism facilities). Generally, The main difference between the regulation provided under the Concession Law and the PPP Law is that in the case of a concession the newly created infrastructure object remains in the state ownership (as opposed to private ownership under the PPP Law), whereas a private partner typically is responsible for its maintenance and operations.

Federal Law 'On the Procedure of Foreign Investment in Business Undertakings Strategically Important for National Defense and State Security of the Russian Federation' sets out the conditions and procedures allowing the Russian government to restrict, on a case-by-case basis, the right of foreign investors to take control of, or gain influence over, or acquire assets of companies engaged in some activities deemed strategically important for Russia's national defense or security. Some activities in the sphere of energy and infrastructure may fall into this category.

In addition, a particular proposed investment may be subject to other legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which investment is to be made), the legal/regulatory position relevant to that project must be considered.

Energy

The energy market in Russia exists in the form of the Unified Energy System which is exclusively administered by the publicly owned public joint-stock company 'The System Operator of the Unified Energy System' (System Operator). There is a complex system of arrangements between the System Operator and other participants of the energy market which is heavily regulated, including, for example, statutory user fare regulation. Some types of activities would also require a special license.

Telecoms infrastructure

There is a complex regulatory environment for this sector as specified in Federal Law 'On Communications' as well as in regulations of the Government, the Ministry of Communications and Mass Communications of the Russian Federation and other regulatory bodies.

Transport infrastructure

Transport infrastructure also has an extensive and complex framework to consider. For example, in relation to rail, this includes understanding the regulatory regime for compulsory certification and declaration of conformity of the railroad infrastructure and user fare regulation. Aviation also has various licensing requirements and regulatory bodies requirements.

Other infrastructure

The regulation of PPPs and concession agreements in Russia is in many ways imperative. For example, the law restricts possible security instruments that the parties may choose (it is generally forbidden to pledge the project assets or the rights under concession agreement, however, certain exceptions exist in the latter case if the project is funded by external creditors) and the selection process. Russian policy favors the jurisdiction of the Russian court for the resolution of contractual disputes for such cases, which foreign investors may not be comfortable with.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Senegal, in addition to existing regulation for investors. However, a particular proposed investment may be subject to legislative or regulatory control (e.g. merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory context relevant to that project must be considered. For example, a project involving development on land will require, among others, planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector-specific regulatory consents or licenses. Where a public entity (e.g. a government department or a local authority) is procuring a project using private finance, and that entity is to benefit from central government funding, the project will be subject to central government approval.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public-sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on Change of Control. This is less of a concern on private sector infrastructure, although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

Electricity

In 1998, the Law on the electricity sector liberalized the energy sector and brought new perspectives for private-sector investment in electricity generation. It was amended in 2002 to introduce greater transparency to the private sector tenders procedures.

The electricity industry is managed by SENELEC, which is the state-owned company, responsible for the distribution of electricity. There are, however, independent power producers such as GTI-Dakar and ESKOM-Manantali.

The regulator of the energy sector is the Electricity Regulatory Board (CRSE), an independent authority created by Law 98-29 of April 14, 1998, relating to the electricity sector and responsible for the regulation of the production, transport, distribution and sale of electric energy in Senegal. It approves revenue requirements and licensing for the sector and leads IPP tender processes. It monitors compliance with regulations, manages disputes between industry players, ensures the protection of consumers' interests and issues opinions on operating licenses and regulatory texts.

SENELEC has a monopoly on transportation across the country, with the exception of the interconnected Manantali hydroelectric dam. The company operates a number of production units (416MW of installed capacity in 2007) and is bound, by contracts, to purchase electricity from independent power producers (IPPs) for a period of 15 years (GTI 1, Manantali 2 and from some Senegalese self-producing industries, totaling about 150MW of additional installed capacity). In addition, SENELEC is under obligation to deploy renewable energy within its concession areas.

Power generation is currently reliant to a significant degree on independent power producers (IPPs).

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Singapore over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses.

Energy

Under the Electricity Act and the Gas Act, no person is permitted to supply or engage in activities related to the supply of electricity or gas respectively in Singapore without the appropriate license to do so issued by the Energy Market Authority (EMA).

Certain types of licenses issued by EMA may be subject to controls and restrictions on the ownership or transfer of shares in the licensees.

The EMA may designate any electricity licensee (DEL) or any entity (DE) or any business trust (DBT) operated by such licensee to be subject to additional restrictions. In particular, prior written approval of the EMA is required for:

• the appointment of chief executive officer, director or chairman of any DEL; and
• any person to acquire the business of a DEL or a DE as a going concern, or certain prescribed levels/forms of control over a DEL, DE or DBT.

Telecoms infrastructure

Although the Singapore telecommunication services market has been fully liberalized since 1 April 2000, pursuant to the Telecommunications Act, any person operating and providing telecommunication systems and services in Singapore has to be licensed by the Info-communications Development Authority of Singapore (IDA). Further, although there are no foreign equity limits or restrictions imposed on licensees, any such licensee must be a company incorporated in Singapore.

The IDA may designate any telecommunication licensee (DTL) or any trust (DT) or any business trust (DBT) operated by such licensee to be subject to additional restrictions. In particular, prior written approval of the IDA is required for:

• the appointment of chief executive officer, director or chairman of any DTL; and
• any person to acquire any part of the business as a going concern, or certain prescribed levels/forms of control over a DTL, DT or DBT.

Transport infrastructure

Under the Bus Services Industry Act 2015, any person operating a bus service in Singapore has to be licensed by the Land Transport Authority (LTA), or otherwise authorized to do so by contract with the LTA. Similarly, any person operating a rapid transit system in Singapore has to be licensed by the LTA. There are no express foreign equity restrictions imposed on such licensees.

With effect from 2016, Singapore will adopt a new contracting model which will enable the Singapore Government to make public bus services more responsive to changes in ridership. Under this model, LTA will determine the bus services to be provided and the service standards, and bus operators will bid for the right to operate these services.

Other infrastructure

Singapore is generally an open economy with minimal foreign ownership or investment restrictions. However, there is legislation relating to particular industries which limits or requires prior regulatory approval for share ownership in companies engaged in those industries. Those industries are generally industries perceived to be critical to national interest, such as banking, insurance and media.

Additionally, the Competition Act prohibits certain business practices that restrict competition in the market and prohibits mergers and acquisitions that substantially, or may be expected to substantially, lessen competition within the Singapore market.

Generally

In general, there is no specific regime governing or restricting investment in energy or infrastructure in Slovakia over and above existing regulation for investors and funders, however, a particular proposed investment may be subject to regulatory control. As regards the planning and implementation of the energy or infrastructure project, the legal/regulatory position relevant to that project must be considered (e.g. whether any permissions or consents of or licenses issued by the public authorities are required, etc). Key sector-specific issues are flagged in the sections below.

Whether an investor can invest in a public sector project will depend on the terms of the procurement of such project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘Change of Control’. This is less of a concern on private sector infrastructure projects although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy market in Slovakia is heavily regulated. In particular, there is a complex regulatory framework regarding licensing, subsidies and demand/charging mechanism and these are subject to regular updates. Therefore, the investors need to have a good understanding of the current framework. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies.

Telecoms infrastructure

The Act on Electronic Communications regulates an environment for this sector, including access and interconnection between the networks, rights and obligations to third party real estate in connection with the establishment and operation of networks, as well as the competence of the state authorities to regulate the prices.

The industry is privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework governed by the Act on Tracks and by the Act on Transport on Tracks, which also includes the conditions for acquiring a license for provision of transport services and which shall be taken into consideration in respect of involvement in this sector. Depending on how an investor wishes to invest in a project (specifically what type of entity or asset), there is a varying degree of difficulty for investors to enter into an existing project. Moreover, investors should consider if, depending on the way of investment, any permits/consents/licenses will be affected by their investment.

Roads

The administration of the roads is, in accordance with Roads Act the responsibility of the state, municipalities or other public sector entities. The respective public sector entity is also responsible for carrying out the maintenance of the roads, however, such duties may be delegated to private sector partners, based on the respective procurement rules. With respect to the highways, the state may procure the construction of and future operation of the highways by a private sector partner under a concession contract awarded on the basis of the public procurement procedure. The precise scope of the restrictions (e.g. whether change of control is allowed) will depend on the contractual terms.

Generally

The overarching consideration for any investment in infrastructure in South Africa, especially where government or regulatory consent is required, is the impact on the country's transformation agenda ie the impact of black economic empowerment (BEE). For example, in the renewable energy sector, each project has been required to have a certain level of black (as defined in the Broad-based Black Economic Empowerment Act) ownership. The Development Bank of Southern Africa provided the primary project finance funding for many of the BEE investors wishing to invest in these projects, allowing for greater participation by historically disadvantaged South Africans in the projects, as investors and developers.

Energy

This is a very regulated sector regardless of the type of energy infrastructure involved and there is a complex licensing regime which usually has the attainment of certain ownership thresholds for example, black ownership and procurement as prerequisites. Accordingly, potential investors must consider the impact of their investment on any licenses held by the investee entity as well as any potential local partners. Any investment that potentially dilutes black ownership in a project is unlikely to receive regulatory approval.

Telecoms infrastructure

South Africa's telecommunications sector is regulated by a number of statutes that enforce certain requirements for applications for different licenses and approvals to establish and operate telecommunications infrastructure.

The Independent Communications Authority of South Africa (ICASA) is the regulator for both the telecommunications and broadcasting sectors. A company wishing to deploy and operate a physical network will require an Electronic Communications Network Service license. An Electronic Communications Service license is required for a company to provide electronic communications services to customers on its own network or through another company's network. Some resources in the telecommunications sector are considered a scarce resource, and as a result there is certain criteria which applicants must meet to obtain the various licenses, with particular emphasis on meeting the South African black economic empowerment requirements and limiting the amount of foreign investment in telecommunications infrastructure to 30%.

Transport infrastructure

Rail, port and pipeline infrastructure

Any form of infrastructure development in relation to railways, ports and pipeline infrastructure will need to be done in conjunction with procurement processes run by Transnet Freight Rail, PRASA, National Ports Authority and Transnet Port Terminals and Transnet Pipelines respectively.

Road transport infrastructure

As stated above, all national roads are controlled by SANRAL. These concessions granted to Bakwena, N3TC and TRAC are for 30 years and will expire around 2030. All road infrastructure development will need to be performed in conjunction with SANRAL and its procurement processes.

Airports

In order to service the international market an airport will need to be granted 'international status' from the Department of Home Affairs in order to have the ability to clear customs from the airport terminal.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in Spain over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (e.g., merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘Change of Control’. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets Spain have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customer and REE (operator of the Spanish electricity system) or ENAGAS (operator of the Spanish gas grid) and these are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice-versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under the General Telecommunications Law of 2003.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework to consider in respect of a practical and operational involvement in this sector. Key areas include understanding the regulatory regime for certification for train use and acceptance and user fare regulation. Depending on how an investor wishes to invest in a project (specifically what type of entity or asset), there is a varying degree of difficulty for investors to enter into an existing project.

Roads

In order for a private sector partner to carry out its duties on certain types of roads projects, the procuring public sector authority may delegate certain of its statutory duties to the private sector partner. This will be dependent on the project and the specific contractual requirements. Any investor will, therefore, need to understand those duties and whether it is able to subcontract those duties to an appropriate person.

Other infrastructure

On publicly procured infrastructure, it is quite common for long-term projects to have a ‘change in control’ clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period. How strict these restrictions are will often depend on the sector. For example, the defense sector usually gives the Ministry of Defense a strong degree of discretion.

Generally

Private financing of infrastructure in Sweden is made through so-called OPS-projects (offentlig-privat samverkan), which are kinds of public-private partnerships. An OPS-project generally means that a project company is established to provide the infrastructure service. OPS-projects are, however, very rare in Sweden.

There is no specific regime governing or restricting investment in energy or infrastructure projects in Sweden over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal and regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses.

Energy

The energy markets in Sweden have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customer and these are subject to change and/or regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license or subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

The railway system has, until recently, been closed off from private investments. Only recently has it been made possible for private entities to operate alongside the public. The railway system is first and foremost a state responsibility. Private investment into the railway system would require a new order of budgeting, as the current system is quite rigid.

Roads

Responsibility for the roads is shared between the state, the municipals and private road associations (some of which receive government funding). As with the railway system, private investment into the road system would require a new order of budgeting, as the current system is quite rigid.

Generally

Generally, investment in the infrastructure business takes the form of public-private partnerships (PPP). The main law is therefore the Public-Private Partnership Act B.E. 2562 (2019) (PPP Act). Where public government authorities procure private sectors, the Government Procurement and Supplies Management Act B.E. 2560 (2017) (GPSMA) is also relevant.

PPP Act generally sets out:

• the PPP Committee to regulate and supervise the private investment on State undertaking;
• eligible categories of infrastructure projects and public services to be invested under the PPP Act:
  • roads, highways, special ways and land-transportation;
  • trains, electric trains and other rail-transportation;
  • airports and air-transportation;
  • ports and water-transportation;
  • water management, irrigation, waterworks and wastewater;
  • energy works;
  • telecommunications and general communications;
  • hospitals and public health;
  • schools and education;
  • housing and facilities for low or medium wage earners, the elderly, underprivileged or disabled;
  • exhibition centres and conference centres; and
  • other projects as to be announced by Royal Decree.
• the investment threshold and applicable rules and procedures being; a project with a value from THB5 billion is subject to the rules and procedures under the PPP Act while others with a value less than THB5 billion is subject to rules and procedures of the PPP Committee; and
• criteria and process of the joint investment between the authority which is a project owner and private sector e.g. feasibility study of the project, selection of private party and on-going supervision of the project, etc.

GPSMA sets out methods and process of procurement, consideration, criteria for selection of offer and forms of contract of procurement.

Foreign Direct Investment (FDI) in infrastructure sectors is not strictly prohibited under Thai law. However, a foreign business license (FBL) or foreign business certificate (FBC) pursuant to the Foreign Business Act B.E. 2542 (1999) (FBA) will normally be required if an operating company is considered a foreigner (being a foreign established entity or a Thai established entity with at least 50% of its shares are owned by foreign natural person and/or foreign entities) unless a foreigner invests in construction of infrastructure for public services in the sphere of public utilities or transportation which requires special apparatuses, machines, technology or expertise with the minimum capital of THB500 million or upwards, FBL or FBC is not required.

Under the Investment Promotion Act B.E. 2520 (1977) (IPA), if the operating business is within the scope of promoted business activities, such company may be eligible for tax and/or non-tax privileges eg right to own a land because it is normally prohibited for a foreigner to have land ownership under Thai laws.

Compliance with Factory Act B.E. 2535 (1992) and Town Planning Act B.E. 2518 (1975) and its subordinated laws is also of importance as the violation of having the license to operate a factory or procedures to take before construction of building could result in revocation of premises as well as civil and criminal sanctions.

Other special requirements could be specified in the term of reference of the project in question or contracts between private investors and public authorities.

Please note that there are ministerial regulations and other subordinated laws, e.g. notification or order, issued pursuant to the act.

Energy

The specific laws and/or regulations regarding the investment in energy sector include:

• Energy Industry Act B.E. 2550 (2007) empowers the Energy Regulatory Commission as the supervisory authority for operation of energy industry business and sets out provisions regarding process for application of a license to operate the industry business and details of energy business operation e.g. standards and safety.
• Petroleum Act B.E. 2514 (1971) empowers the Petroleum Commission as the supervisory authority for energy business operation and sets out details of concession to operate the petroleum business and the operation of the petroleum business e.g. sale and disposal and payment of governmental fees.
• Fuel Trade Act B.E. 2543 (2000) sets out regulatory provisions regarding the trading, transportation and quality of fuel as well as preventive and mitigation measures for fuel shortage.
• Fuel Control Act B.E. 2542 (1999) empowers the Fuel Control Commission as the supervisory authority for business operation concerning with possession of fuel, fuel station, fuel storage and transportation of fuel as well as sets out details and requirement of such business operators.
• Promotion of Energy Conservation Act B.E. 2535 (1992) sets out provisions relating to energy reservation in an industrial plant, building and machine.

Telecoms infrastructure

The specific laws and/or regulations regarding the investment in telecoms infrastructure include:

• Radio Communications Act, B.E. 2498 (1955) sets out provisions regarding licensing application and approval for production, use, importation, exportation and trading of radio communication equipment.
• Sound Broadcasting and Television Broadcasting Act B.E. 2498 (1955) sets out provisions regarding licensing application and approval for sound and television broadcasting business including legal obligation from such business operation.
• Telecommunications Business Act B.E. 2544. (2001) sets out provisions regarding licensing application and approval for operation of telecommunication business, requirements to access and interconnect telecommunication network, standard of telecommunication network and equipment, rights of licensee and user and details of contract between the licensee and user.
• Broadcasting and Television Businesses Act B.E. 2551 (2008) sets out provisions regarding licensing application and approval for operation of broadcasting and television business, details of types of business, ratio and details of programs to be broadcasted and requirements for construction of fundamental network and the use and connect of network.
• Organization to assign Radio Frequency and to regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010) empowers NBTC and the National Telecommunications Commission (NTC) as the supervisory authority for business operation of broadcasting, television and telecommunication and sets out provisions regarding licensing application for such business operation.

Transport infrastructure

As mentioned above, mostly the form of investment in rail and road is PPP. Therefore, the relevant laws are for example PPP Act, GPSMA, FBA and IPA.

Other infrastructure

Social infrastructure (schools, hospitals, emergency services centers / prisons)

The main acts regulating the below social infrastructure are as follows.

Education

• Private School Act B.E. 2550 (2007) empowers the Office of the Private Education Commission as the supervisory authority for operation of private school and sets out provisions regarding the requirements for establishment of private school in terms of licensing, operation and funds.
• Private Higher Education Institution Act B.E. 2546 (2003) empowers the Office of the Higher Education Commission as the supervisory authority for operation of private higher education institution and sets out provisions regarding the requirements for establishment of private higher education institution in terms of licensing, operation and funds.

Hospitals

Sanatorium Act, B.E. 2541 (1998) empowers the Sanatorium Commission as the supervisory authority for operation of sanatoriums and sets out provisions regarding the requirements for establishment of sanatorium in terms of licensing and operation.

Generally

There is no specific regime restricting investment in energy or infrastructure projects in Ukraine for investors and funders but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules, authorizations, currency control restrictions).

In the course of the planning and implementation of an underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order, and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval.

The gas and energy markets in Ukraine have a complex system of arrangements between suppliers, generators, transmitters and distributors which are heavily regulated. In particular, there are complex arrangements in respect of licensing, environmental permits, dangerous work performance permits, charging mechanisms with suppliers and customers and access to the local grid system.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in the UK over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (eg a government department, a local authority or a National Health Service Trust) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on 'Change of Control'. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in the UK have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customer and the National Grid and these are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under the Digital Economy Act 2017, Communications Act 2003 and the Communications (Access to Infrastructure) Regulations 2016 and how Ofcom grants rights to access private or public land in order to install and maintain essential equipment in, over or under that land. This equipment might be cables sunk beneath the ground or a mobile mast sited on the ground.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework to consider in respect of a practical and operational involvement in this sector. Key areas include understanding the regulatory regime for certification for train use and acceptance and user fare regulation. Depending on how an investor wishes to invest in a project (specifically what type of entity or asset), there is a varying degree of difficulty for investors to enter into an existing project. For example, rolling stock operating companies (ROSCOs) are privately owned companies where third party investment is relatively common whereas train operating companies (TOCs) are often special purpose vehicles so, in theory, investment into a TOC should be relatively straightforward. However, any change in control of a TOC under a Franchise Agreement will usually require a consent from the Department for Transport. Note that the UK government is currently reviewing its policy on rail franchising and the market is expecting changes to be made to the current model.

Roads

In order for a private sector partner to carry out its duties on certain types of roads projects, the procuring public sector authority (Highways Agency or a local authority) may delegate certain of its statutory duties to the private sector partner. This will be dependent on the project and the specific contractual requirements. Any investor will, therefore, need to understand those duties and whether it is able to subcontract those duties to an appropriate person. There is usually a restriction on the change of control of the private sector partner during the construction period. Following the construction period, the private sector may be allowed a change of control provided that they do not fall within a definition of an 'Unsuitable Third Party' (which may include concerns about national security, tax avoidance). The precise scope of the restrictions will depend on the contractual terms.

Other infrastructure

On publicly-procured infrastructure, it is quite common for long-term projects to have a 'change in control' clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post construction provided any change in control is not to an 'Unsuitable Third Party'. How strict these restrictions are will often depend on the sector. For example, the defense sector usually gives the Ministry of Defence a strong degree of discretion (particularly on the grounds of national security) as to whether to accept a change in control over its private sector partner.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in the UK over and above existing regulation for investors and funders more generally but a particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission [or a development consent order]; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (eg a government department, a local authority or a National Health Service Trust) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

Whether an investor can invest will depend on the terms of the procurement of that project if it is a public sector project and, in respect of an existing/operational project, that will depend on whether there are any contractual restrictions on ‘Change of Control’. This is less of a concern on private sector infrastructure although investors would need to consider whether any licenses/consents/permits would be affected by their acquisition of an interest.

Energy

The energy markets in the UK have a complex system of arrangements between suppliers, generators, transmission and distribution which are heavily regulated. In particular, there are complex arrangements in respect of licensing, subsidies and demand/charging mechanism with suppliers, customer and the National Grid and these are subject to change/regular updates meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how technology changes may impact on the overarching regulatory framework and vice versa.

Investors should also consider whether the acquisition of any interests in the energy sector (at an entity or asset level) would cause any issues with any license conditions or the granting of specific subsidies. In particular, if a breach of those conditions could lead to the revocation of a license/subsidy that might make the potential target less attractive or viable.

Telecoms infrastructure

There is a complex regulatory environment for this sector including how access and interconnectors (between networks) are regulated under the Communications Act 2003 and (Access to Infrastructure) Regulations 2016 and how Ofcom grants rights to access private or public land in order to install and maintain essential equipment in, over or under that land. This equipment might be cables sunk beneath the ground or a mobile mast sited on the ground.

The industry is largely privatized, therefore investors should consider if any permits/consents/licenses will be affected by their interest.

Transport infrastructure

Rail

There is an extensive and complex regulatory framework to consider in respect of a practical and operational involvement in this sector. Key areas include understanding the regulatory regime for certification for train use and acceptance and user fare regulation. Depending on how an investor wishes to invest in a project (specifically what type of entity or asset), there is a varying degree of difficulty for investors to enter into an existing project. For example, rolling stock operating companies (ROSCOs) are privately owned companies where third party investment is relatively common whereas train operating companies (TOCs) are often special purpose vehicles so, in theory, investment into a TOC should be relatively straightforward. However, any change in control of a TOC under a Franchise Agreement will usually require a consent from the Department for Transport.

Roads

In order for a private sector partner to carry out its duties on certain types of roads projects, the procuring public sector authority (Transport Scotland or a local authority) may delegate certain of its statutory duties to the private sector partner. This will be dependent on the project and the specific contractual requirements. Any investor will, therefore, need to understand those duties and whether it is able to subcontract those duties to an appropriate person. There is usually a restriction on the change of control of the private sector partner during the construction period. Following the construction period, the private sector may be allowed a change of control provided that they do not fall within a definition of an ‘Unsuitable Third Party’ (which may include concerns about national security, tax avoidance). The precise scope of the restrictions will depend on the contractual terms.

Other infrastructure

On publicly-procured infrastructure, it is quite common for long-term projects to have a ‘change in control’ clause which restricts change in ownership structures of the private sector. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post construction provided any change in control is not to an ‘Unsuitable Third Party’. How strict these restrictions are will often depend on the sector. For example, the defense sector usually gives the Ministry of Defence a strong degree of discretion (particularly on the grounds of national security) as to whether to accept a change in control over its private sector partner.

Generally

There is no specific regime governing or restricting investment in energy or infrastructure projects in the UAE except to the extent that may be set out in UAE Law and an invitation to tender (ITT) for such projects.

In addition, the ownership of the infrastructure must not violate the laws of foreign ownership of land and assets by a foreign national and company laid down in the New Commercial Companies Law, Federal Law No. 2 of 2015 (CCL) or any relevant regulations and circulars issued by the UAE Central Bank.

The interested investment party will need to examine the ITT carefully to ensure it complies with any specific requirements for that project including specific procurement provisions there may be. To this end the UAE public procurement legislation may be relevant.

A particular proposed investment may be subject to legislative or regulatory control (eg merger control rules). As regards the planning and implementation of the underlying energy or infrastructure project (in which the investment is to be made), the legal/regulatory position relevant to that project must be considered. For example, a project involving development on land will require planning permission or a development consent order; and a project may require environmental authorizations/permits and/or sector specific regulatory consents or licenses. If a public body (eg a government department, or a local authority) is procuring a project using private finance, and the public body is to benefit from central government funding towards the cost, the project will be subject to central government approval. Key sector-specific issues are flagged in the sections below.

There are specific rules governing the ownership of land in each of the seven Emirates. Some of the free zones allow purportedly 100% foreign ‘freehold’ ownership of land. However, this applies only to residential property. With the exception of nationals from other Gulf Cooperation Council countries (GCC) it is generally very difficult for foreign nationals or companies to own land to develop for commercial purposes.

It follows from the above paragraph that any foreign investors in infrastructure projects must do adequate due diligence to ensure they can secure use of the land on which the infrastructure is to be built for the entire duration of the project. Failure to secure such rights will have a serious economic effect on the project.

Energy

Energy projects in the UAE are complex due to arrangements in respect of licensing, subsidies and revenue flow structure. In addition, current regulations are apt to change frequently, meaning that investors will need to have a good understanding of the current framework and the potential directions in which the market may move. Investors need to understand how political and technology changes may impact on the overarching regulatory framework.

Since natural resources belong to the public as a whole, another issue to address in project documentation will be that of ‘sovereign immunity’ and specific warranties and waivers need to be included in the project documents.

Specifically with respect to energy infrastructure projects and power generation, the investor should pay attention to the power purchase agreement/offtake agreement/tolling agreement etc, as if the off-taker is a government or quasi-government entity, it is possible that the project will not be able to sell its power/services at a full-y commercial rate which will impact the commercial value and project economics.

Other infrastructure

On other forms of infrastructure, much of the regulation and standard contracting terms should be set out in the ITT.

It is likely that long-term projects will include ‘change in control’ clauses which restrict change in ownership structures. For example, in most sectors there is a restriction on change in control during the construction period but this is often relaxed post construction provided any change in control is not to an ‘Unsuitable Third Party’.

How strict these restrictions are will often depend on the sector. For example, the energy sector has a deep-rooted fear of contractors bringing sub-contractors from cheaper territories, which is often considered to infer there may be quality and performance issues. As a result, the project sponsor will often require strict non-assignment provisions to ensure an assignment cannot be made without its reasonable consent.

Specific restrictions may be included depending on the nature of the project and how revenue for the project parties is being raised and shared. In general, in the UAE most infrastructure projects will use as their contracting base variations of internationally recognized contracts especially AIPN, FIDIC and JCT. In addition, most project financing follows international best practice and often involves the use of Loan Market Association standard agreements. While form is familiar, the details will be specific to the project and the project sponsor.

Generally

The Committee on Foreign Investment in the United States (CFIUS) reviews the national security implications of transactions that would result in a foreign entity controlling a US business. CFIUS has at times found control when an entity has acquired less than 20% of the equity of a business. The President is authorized to suspend or prohibit a transaction under CFIUS jurisdiction when the President finds credible evidence that a foreign person controlling a US business might take action that threatens to impair the national security, and when no other provision of law (other than the International Emergency Economic Powers Act) provides suitable alternative authority. CFIUS does not have jurisdiction over greenfield investments or passive equity investments of 10% or less.

Section 7 of the Clayton Antitrust Act of 1914 (Clayton Act) prohibits 'acquisitions of assets or voting securities, the effect of which may be substantially to lessen competition or to tend to create a monopoly.' Enforcement standards applied by the US Department of Justice and the Federal Trade Commission are described in their Horizontal Merger Guidelines. Many transactions are reviewed pursuant to the Hart-Scott-Rodino Amendments to the Clayton Act which require formal advance notification to US Department of Justice and the Federal Trade Commission for many acquisitions of assets or equity interests over a certain size (currently US$80.8 million, a value adjusted annually).

Energy

The Federal Energy Regulatory Commission reviews many mergers and acquisitions involving energy assets pursuant to the Federal Power Act. It is in charge of determining the impact of the proposed transaction on competition and rates and reviewing concerns regarding the concentration of market power. Certain states also require the approval of such transactions by the state public utility commission. Many regulated and private energy companies seek to impose restrictions on the change in ownership or control of energy assets or company or the direct transfer of such assets via contractual limitations placed in long-term power purchase agreements, interconnection agreements as well as construction, supply, warranty and operation and maintenance agreements.

Telecoms infrastructure

As noted above, the Federal Communications Commission is the primary regulator of the telecommunications industry in the US. The transfer of licenses or companies holding licenses is subject to the review of the Federal Communications Commission. Pursuant to the Communications Act, the Federal Communications Commission is charged with determining if the proposed transaction will serve the public interest.

Transport infrastructure

Most investment in the transport infrastructure sector involves the US Department of Transportation (DOT) or an agency within the DOT, in addition to state and local transport authorities. By way of example, investments in roads, bridges and tunnels typically involve the Federal Highway Administration, an agency within the DOT. There are typically a number of legal requirements which must be met by such projects. The Federal Aviation Administration, also within the DOT, oversees the aviation sector. Public transit projects generally fall under the purview of the Federal Transit Administration, also a part of the DOT. Passenger rail and freight rail matters are governed by the Federal Railroad Administration which is once again included within the DOT. The DOT and local port authorities also handle port related matters.

Other infrastructure

In the US, social infrastructure such as schools, housing and hospitals are often operated by state or local authorities although of course many such assets are privately owned and operated. Increasingly, such projects are developed via public-private partnerships. In such cases, the applicable state or local government entity seeking a private investor to partner with will typically establish the relevant requirements in the applicable request for proposals.