Any contracts with the Libyan authorities in connection with the project will be subject to the Administrative Contracts Regulation (ACR) as supplemented by Decree 12/2023. The ACR applies to all government projects and projects that are ultimately funded from the government budget. The ACR regularly applies to PPAs and other contracts that government entities enter into with investors in connection with a power project. Decree 12/2023 on government procurement was issued on 8 January 2023 to supplement the ACR.

Pursuant to the ACR, all government projects must be awarded through competitive tender proceedings. With respect to large infrastructure projects such as IPPs, the tender rules are often considered inappropriate and the projects are awarded by way of sole sourcing, normally based on a Council of Ministers resolution. Sole sourcing now is addressed in Articles 14 sequitur of Decree 12/2023.

In addition to tender rules, the ACR also provides for certain substantive contract law principles that are applicable to government projects. These principles include the exclusion of a private party's suspension right in the event of non-payment and the government authority's privilege to terminate the contract for convenience at any time. In the event the termination is not attributable to the private party, the government authority is obliged to fully compensate the private party. Typically, the parties would agree in the PPA how the compensation would be calculated in that case.

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