1 Collateral What types of collateral are available? Collateral used in secured financings can also be used in project financings. A full security package includes guarantees, mortgages over real estate, buildings and machinery and pledges over receivables, bank accounts, securities, proceeds, equipment, inventory, intellectual property rights and the entire business (similar to a
floating charge under English law, covering all business assets except for immoveable property and 50 per cent of the value of the stock). The fiduciary transfer of title of financial instruments and cash on bank accounts is valid and enforceable in accordance with the Financial Collateral Act of 15 December 2004.

2 Perfection and priority
How is a security interest in each type of collateral perfected and how is its priority
established? Are any fees, taxes or other charges payable to perfect a security
interest and, if so, are there lawful techniques to minimise them? May a corporate
entity, in the capacity of agent or trustee, hold collateral on behalf of the
project lenders as the secured party?

Mortgages and business pledges must be recorded at the local Mortgage Registry. Pledges on intellectual property
rights must be officially recorded or notified to the relevant offices for intellectual property rights. Pledges on bank accounts and other receivables must be notified to the relevant banks and debtors. Pledges on registered shares
must be registered in the company’s shareholders’ register. In accordance with the Financial Collateral Act of 15 December 2004, it is sufficient for book entry securities collateral to be credited to a special account. Mortgages and
business pledges must be drafted in one of Belgium’s official languages (Dutch, French and German), as this is required for their registration.  Mortgages and mortgage mandates (explained below) must be notarised.

There are no significant costs payable to perfect security interests other than those relating to mortgages
and business pledges. Mortgages and business pledges give rise to registration
duties and other costs, based on the value of the secured claim. These costs
amount to about 1.5 per cent of the secured amount for a mortgage and 0.6 per
cent of the secured amount for a business pledge. The costs can be reduced by
using a mortgage mandate instead of a mortgage (or a business pledge mandate
instead of a business pledge). This is an irrevocable power of attorney granted
by the borrower to a third party related to the lender, entitling the proxy
holder to create and register a mortgage (or business pledge) in the future,
upon the lender’s demand. The registration costs are payable when the mortgage (or
business pledge) is created and registered, not when the mandate (proxy) is
given.

Except for pledges over financial instruments and cash on bank accounts, Belgian law does not generally recognise
the possibility of a security agent holding security on behalf of a fluctuating
body of creditors. It is generally held that security must be granted to the creditor(s)
of the secured claim(s) directly. A common technique used to overcome this
issue is the parallel debt arrangement: the security granted to the security
agent does not secure the claims of the creditors under the loan but the
‘parallel debt’ in relation to the security agent. The security agent obtains a
parallel claim on the borrower equal to the total amount of the debts the
borrower owes to the lenders under the loan. The parallel debt becomes due and
payable and will be considered paid and discharged at the same time and to the
same extent as the loan, so that the borrower cannot be forced to pay the same
debt twice. The parallel debt arrangement neutralises the impact of the
composition of the lenders over time. However, the lenders remain at risk in
the event of the bankruptcy of the security agent, because the collateral is
generally not held to be excluded from the security agent’s estate.

As mentioned above, the situation is different for pledges over financial instruments and for pledges over cash
credited to an account. The Financial Collateral Act of 15 December 2004 has
recognised that a security agent can hold such collateral on behalf of the lenders
as an actual trustee, without the need for any parallel debt structure and
without any risk for the lenders if the security agent goes bankrupt.

3 Existing liens

How can a
creditor assure itself as to the absence of liens with priority to the
creditor’s lien?

For mortgages, business pledges and pledges over intellectual property rights, a public search can be carried out
at the relevant Mortgage Registries and offices for intellectual property
rights. Informationon attachments and certain statutory liens (such as liens
ofunpaid sellers) can be requested from the relevant commercial court. In
principle, the company’s annual accounts should provide general information as
to security interests that have been granted. Information on the occurrence of
any bankruptcy judgment (if any) may be found in the Belgian State
Gazette. Obviously, legal due diligence can be conducted and
representations and warranties can be agreed upon.

4 Enforcement of collateral

Outside the context of a bankruptcy proceeding, what steps should a project lender take
to enforce its rights as a secured party over the collateral?

Mortgages, pledges over the business, pledges over tangible assets and pledges over intellectual property
rights can in principle only be enforced after having obtained court approval.
Pledges over financial instruments and pledges over cash on bank accounts can
be enforced without prior court approval. The beneficiary of the pledge over financial
instruments is even allowed to appropriate the financial instruments provided
that the pledge agreement expressly allows this possibility and the valuation
method is stipulated in the pledge agreement. Pledged receivables can be
collected by the beneficiary of the pledge provided the pledge has been
notified to the relevant debtors.

If the company requests a judicial reorganisation, the security rights granted by the company may temporarily not
be enforced (except for a pledge over financial instruments and cash on bank accounts,
which can be enforced, in accordance with the Financial Collateral Act of 15
December 2004, even in case of an insolvencyproceeding, attachment or any other
event of concursuscreditorum). Outside insolvency proceedings, a
creditor without security rights can enforce its claim by attaching its
debtor’s assets.

5 Bankruptcy proceeding

How does a bankruptcy proceeding in respect of the project company affect the ability of
a project lender to enforce its rights as a secured party over the collateral?
Are there any preference periods, clawback rights or other preferential
creditors’ rights (eg, tax debts, employees’ claims) with respect to the
collateral? What entities are excluded from bankruptcy proceedings and what
legislation applies to them? What processes other than court proceedings are
available to seize the assets of the project company in an enforcement?

If a company is declared bankrupt, a receiver will be appointed by the court. The receiver will realise the assets
of the company and will settle the creditors’ claims. The creditors’ claims
will be settled in a  specific order: secured creditors will rank before unsecured creditors and creditors who
perfected their security first will rank before creditors holding the same
security perfected at a later date. There are various preferential creditors’
rights, including statutory liens for the tax and social security authorities.
In accordance with the Financial Collateral Act of 15 December 2004, a pledge
over financial instruments and cash on bank accounts can be enforced, even in
case of insolvency.

As a rule, there is no hardening period under Belgian law. The assumption is that the bankrupt company is unable to pay
its debts (suspension of payments) as from the date of the declaration of
bankruptcy by the commercial court. As an exception to the rule, the court can,
however, install a hardening period prior to the declaration of bankruptcy if
there are serious and objective circumstances that clearly indicate that the
company was unable to pay its debts prior to the date of the declaration of
bankruptcy. The hardening period is a period of a maximum of six months prior
to the declaration of bankruptcy by the commercial court (unless, in certain
cases, the bankrupt company has been dissolved more than six months before the
declaration of bankruptcy). Certain actions entered into during the hardening
period (eg granting security interests for pre-existing debts) can be declared
unenforceable against the bankrupt estate. Regardless of any declaration by the
court of a hardening period, transactions that are entered into with fraudulent
prejudice to creditors can be declared unenforceable against the bankrupt
estate.

In insolvency proceedings, claims from foreign creditors are treated in the same way as claims from local
creditors, except that foreign creditors may have to provide an upfront
guarantee to secure any sums they eventually may have to pay as a result of the
proceedings. Before a foreign judgment can be enforced in Belgium, the Belgian
court may also have to make a declaration of enforceability (exequatur).

The Bankruptcy Act does not apply to entities that do not engage in commercial activities. However, when two or more
creditors simultaneously seek enforcement of their claims vis-à-vis a non-commercial
entity, the general principle of equal treatment of creditors will apply (paritas
creditorum).

6 Foreign exchange

What are the restrictions, controls, fees, taxes or other charges on foreign
currency exchange?

There are no restrictions, controls, fees, specific taxes or other charges, except that banks may impose fees on
currency exchanges and follow anti-money laundering procedures.

7 Remittances

What are the restrictions, controls, fees and taxes on remittances of investment returns
or loan payments to parties in other jurisdictions?

There are no major controls or laws that restrict profit repatriation. Standard withholding tax rates are 25 per
cent or 15 per cent on dividends (liquidation and redemption bonuses are taxed
at 10 per cent or may qualify for exemption) and 15 per cent on interest
payments. These rates are subject to many exceptions, reductions and exemptions
under domestic Belgian tax law and Belgium’s numerous tax treaties.
For instance, under certain conditions, no withholding tax is due on dividends
paid by a Belgian subsidiary to a qualifying EU parent company or on interest
paid by a Belgian company to a qualifying affiliated EU company.

8 Repatriation

Must project companies repatriate foreign earnings? If so, must they be converted to
local currency and what further restrictions exist over their use?

Belgian companies do not have to repatriate foreign earnings. But if they do, they do not have to convert
foreign earnings into local currency.

9 Offshore and foreign currency accounts

May project companies establish and maintain foreign currency accounts in other
jurisdictions and locally?

Belgian companies can establish and maintain foreign currency accounts in other jurisdictions and in Belgium.

10 Foreign investment and ownership restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a
project and related companies? Do the restrictions also apply to foreign
investors or creditors in the event of foreclosure on the project and related
companies? Are there any bilateral investment treaties with key nation states
or other international treaties that may afford relief from such restrictions?
Would such activities require registration with any government authority?

Belgium has a policy of open foreign direct investment, in support of which it has entered into a number of bilateral and
multilateral treaties to increase investment opportunities and provide protections for foreign investors.

Belgium is part of the Belgo-Luxembourg Economic Union (BLEU), which has signed bilateral investment agreements with 77
countries in order to promote and protect investments. These agreements guarantee
the fair and equitable treatment of the investors’  investments, they specify ‘most favoured
nations’ to prevent discrimination, they offer compensation for deprivation of
property, they guarantee the free transfer of income and they create a legal
framework for resolving investment disputes and for using international arbitration
systems for investors. They also include various social and environmental provisions.

The definition of ‘investment’ used includes any kind of asset owned or controlled, directly or indirectly, by any
investor of one contracting party in the territory of the other contracting
party and includes, but is not limited to:

• moveable and immoveable property and other property
  rights such as mortgages, privileges, pledges, usufruct and similar rights;
• shares, stocks, bonds and other forms of equity
  in the company;
• claims and rights to any performance having an
  economic value, including any loan made to create economic value;
• intellectual property rights, including, but not
  limited to, copyright and related rights, industrial property rights,
  trademarks, patents, industrial designs and technical processes, titles
  protecting plant varieties, know-how, trade secrets, trade names and
• goodwill; and
• the rights to any economic and commercial
  activity, conferred by law or contract, including concessions to search
  for, cultivate, extract or exploit natural resources. Belgian and EU
  merger controls apply, to prevent domination of markets by an individual
  market player.

11 Documentation formalities

Must any of the financing or project documents be registered or filed with any
government authority or otherwise comply with legal formalities to be valid or
enforceable?

In general, there are no substantial legal documentation formalities with regard to financing and project documents.

As to the financing contracts, thereare few requirements to register or file documentation or comply with legal
formalities, other than the general legal rules regarding validity and
enforceability of agreements. Please refer to the answer to question 2 as to
the perfection requirements and formalities in relation to security interests.

As to construction contracts, no standard forms are in use. When the owner is a private person or company, the
parties to the design or construction contract are completely free to draft it
to suit their requirements, subject to compliance with statutory rules that are
of public order or mandatory. For public entities, there is normally a public
tender process, governed by the public procurement rules. The general terms and
conditions for contracts with public authorities are set out in the annex to
the Royal Decree dated 26 September 1996 (GTC). Contracting authorities are allowed
to derogate from the GTC under certain conditions.

Any transfer of real estate must be acknowledged by a notary public. The transfer deed must be registered at the
mortgage registry. Registration fees are usually paid by the purchaser and
amount to 10 per cent of the sale price in Flanders and 12.5 per cent in Brussels and Wallonia.
Companies which usually buy properties with the intention of selling them on
within 10 years can benefit from a reduced fee if certain conditions are met.
If the building is considered a new building, registration fees are due only on
the purchase price of the land, the construction being subject to VAT (this
regime will, however, change by 1 January 2011). The same applies to rights in
rem such as long-term leases on a new building and rights to build.

12 Government approvals

What government approvals are required for typical project finance transactions?
What fees and other charges apply?

Necessary governmental approvals depend on a range of variables such as the location, sector and size of the
project. Any particular project may require a number of approvals, licences,
permits and consents at the federal, regional (Brussels,
Flanders, Wallonia) and municipal level. Local authorities (municipalities) usually issue the construction permits required
for construction projects. Procurement laws apply to public sector projects.
Please refer to the answer to question 25 for further details of the permits
required under environmental, health and safety laws. Foreign investments are
generally not subject to stricter approval requirements than domestic investments.

13 Foreign insurance

What restrictions, fees and taxes exist on insurance policies over project assets
provided or guaranteed by foreign insurance companies? May such policies be
payable to foreign secured creditors?

Insurance policies over assets located in Belgium
can be provided by foreign insurance companies. Foreign insurance companies
subject to the laws of an EEA country can carry out such insurance business if they
are authorised to do so under the laws of that EEA country and a file has been
submitted to the Belgian Banking, Finance and Insurance Commission. Non-EEA
insurance companies must be authorised by the Banking, Finance and Insurance
Commission.

Insurance policies may be payable to foreign secured creditors. Provided that insured risks are located in Belgium,
insurance contracts concluded with foreign insurance companies may trigger Belgian
tax on insurance premiums (eg, 1.1 per cent tax for life insurances concluded
by an individual and 4.4 per cent tax for life insurances concluded with a
legal entity).

14 Foreign employee restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to
work on a project?

Nationals of EEA member states can be employed in Belgium without visas or work permits. Non-EEA workers must obtain a visa and/ or a work permit. Streamlined procedures exist for temporary workers, highly
qualified (and highly remunerated) technicians and senior executives. There are
no requirements under Belgian law to employ a minimum number of local workers
on a particular project.

15 Equipment import restrictions

What restrictions exist on the importation of project equipment?

Import/export licensing requirements, prohibitions and restrictions are aspects of customs controls. The rules are
based on European legislation and enforced by the customs authorities.

Goods imported into Belgium can be liable to four kinds of import charges: customs duties, VAT, agricultural
levies and excise duties. Additionally, imported goods may be liable to
antidumping and countervailing duties.

Manufactured goods originating from EU member states are admitted to Belgium free of customs duty. Most
manufactured goods originating from member countries of the European Free Trade
Association are also admitted free of duty, subject to evidence of origin.

Goods originating from other countries may be subject to full customs duty. A refund of certain customs
(‘drawback’) may be claimed if the goods are exported after the duty on them
has been paid. There are also facilities for the temporary importation of goods
for repair, undergoing manufacture processes or other purposes.

Import transactions are normally subject to import VAT. Certain specific transactions can benefit from a VAT
exemption. Import VAT is recoverable if the imported goods are used for a
VAT-taxable activity. Foreign companies can ask for refund of this import VAT. Please
refer to the answer to question 10 in relation to foreign investment and
ownership restrictions.

16 Nationalisation and expropriation

What laws exist regarding the nationalisation or expropriation of project companies and
assets? Are any forms of investment specially protected?

The risks of nationalisation and expropriation are relatively low in Belgium, though no forms of
investment are specially protected.

No specific legislation exists with respect to nationalisations. In recent years, ‘nationalisations’ have been
driven by unique external events, such as the financial crisis, which led to
the partial acquisition of Fortis by the federal government.

Belgium has several expropriation laws but only the expropriation procedure set out in the Act of 26 July 1962 is used in
practice. Expropriation is only permitted in the public interest and
compensation has to be paid. A judge has to rule on the legality of the
expropriation. Expropriation is carried out on a non-discriminatory basis between
Belgians and foreigners.

17 Fiscal treatment of foreign investment

What tax incentives or other incentives are provided preferentially to foreign investors
or creditors? What taxes apply to foreign investments, loans, mortgages or
other security documents, either for the purposes of effectiveness or
registration?

In general, foreign investments trigger the same fiscal consequences as domestic investments. Belgian
establishments of foreign companies are taxed in Belgium
although Belgium’s tax treaties provide limitations to Belgium’s
tax competence. In recent years, both Belgian companies and foreign companies
with a Belgian establishment have benefited from a tax deduction in the form of
‘notional interest’, which corresponds to a percentage of the company’s equity (subject to a few corrections).

18 Government authorities

What are the relevant government agencies or departments with authority over projects in
the typical project sectors? What is the nature and extent of their authority?
What is the history of state ownership in these sectors?

Under the influence of the European Union’s liberalisation and freemarket policy, Belgium has allowed the private
sector to become involved in public utilities. Various industries have been
privatised and/or liberalised, for example the electricity sector,
telecommunications, public transport and postal services.

Referring to the answers to questions 12 and 25, many variables, such as the project sector and the
location, will determine which government agencies need to be consulted in a
project. For instance, in the energy sector, a rather complex division of
rules, regulations and regulators exists between the federal and regional authorities.

For example, the federal government is responsible for the transmission of electricity at high voltage whereas the
three regional governments are responsible for the local transmission of
electricity at 70 kilovolts or less. CREG is the federal regulator and VREG, Cwape
and BRUGEL are the regional regulator in Flanders, Wallonia and Brussels respectively.

19 International arbitration

How are international arbitration contractual provisions and awards recognised by local courts? Is
the jurisdiction a member of the ICSID Convention or other prominent dispute
resolution conventions? Are any types of disputes not arbitrable? Are any types
of disputes subject to automatic domestic arbitration?

Belgium is a member of the ICSID Convention. Belgium
is also a longstanding member of the 1958 New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards. Belgium chose
to impose a condition of reciprocity and declared that it will only apply the
New York Convention to the recognition and enforcement of awards made in the
territory of other states that have ratified the New York Convention. For
arbitral awards made in other non-ratifying countries or with whom Belgium does
not have a (bilateral) agreement, articles 1719 to 1723 of the Belgian Judicial
Code apply. Grounds to refuse enforcement of an award are the following:

• if the arbitral award is still open to appeal
  (and the arbitrators did not order provisional enforcement);
• if the award or its execution is contrary to
  public policy;
• if the dispute could not be settled through
  arbitration; or
• if there are grounds for the annulment of the
  award under article 1704 of the Belgian Judicial Code.

The ‘more favourable-right provision’ of article VII of the New York Convention applies in Belgium. If the
parties agree, almost any type of dispute can be arbitrated. Litigation directly arising in the context of insolvency proceedings may, however, not be arbitrable.

20 Applicable law

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s
law typically governs financing agreements? Which matters are governed by
domestic law?

Parties may freely choose the law applicable to the project, subject to certain principles such as public order
and conflict of laws. If the project predominantly concerns Belgium and/or
the financing is arranged by Belgian banks, the agreements will often be
governed by Belgian law. With regard to international projects or financings arranged
by international banks, the financing agreement can quite often be governed by
English law to facilitate syndication on the London market.

In any event, security agreements in relation to assets located in Belgium
are governed by Belgian law. Belgian law will also mandatorily govern property
law aspects, tax and customs duties, employment law, safety law, environmental
law, permits and insolvency law (if certain conditions are met).

21 Jurisdiction and waiver of immunity

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

A Belgian company can submit itself to the jurisdiction of foreign courts.

A judgment rendered by a court of competent jurisdiction in an EU member state which is enforceable in such
member state will be recognised and enforceable by the Belgian courts without a
review of the merits of the case, in accordance with, and subject to, the conditions
set out in the Council Regulation (EC) No 44/2001 of 22 December 2000 on
jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (as amended).

A final and conclusive judgment for the payment of money rendered by a court of competent jurisdiction in a non-EU
country which is enforceable in that country would generally only be recognised and enforceable in Belgium
after a review of the merits of the case by the competent Belgian Court of
First Instance. A review of the merits of the case involves ensuring that
‘minimum’ standards of law have been complied with. The Belgian Court of First
Instance will have to be satisfied that the conditions set out in the Belgian Conflict
of Law Code are fulfilled. For instance, the judgment cannot be contrary to
Belgian public policy and the rights of defence must have been respected.

22 Title to natural resources

Who has title to natural resources? What rights may private parties acquire to these
resources and what obligations does the holder have? May foreign parties
acquire such rights?

The ownership of the land extends inprinciple to the soil under the surface so it encompasses the natural resources
in the soil. However, the extraction of natural resources may require a permit, licence or notification.

Specific mining laws exist, but except for its coal, which is no longer economical to exploit, Belgium has no
major natural resources.

23 Royalties on the extraction of natural resources

What royalties and taxes are payable on the extraction of natural resources, and are
they revenue- or profit-based?

Companies whose business is the
extraction of natural resources are subject to the same tax rules as other
businesses. As to income taxes, the general rules of corporate tax apply.

24 Export of natural resources

What
restrictions, fees or taxes exist on the export of natural resources?

In general, export transactions are
not subject to customs duties in Belgium or the European Union.
Export transactions also benefit from a VAT exemption. However, the export of
specific goods can be subject to export restrictions or surveillance measures
(eg goods used for military purposes). The export of agricultural products can
be subject to export refunds.

25 Environmental, health and safety laws

What laws
or regulations apply to typical project sectors? What regulatory bodies
administer those laws?

The three regions (the Flemish,
Walloon and Brussels Capital Region) have jurisdiction on environmental
matters, except for product standards, the protection of the maritime
environment, the transit of waste and radiation protection which remain under
federal jurisdiction. All three regions have adopted their own legislation to
protect, maintain and manage the environment. Although EU environmental law
tends towards harmonisation, there are differences in environmental law between
the three regions, particularly with respect to soil pollution. For instance,
in Flanders and Brussels, but not Wallonia, the transfer of real estate must, in principle,
be preceded by a soil survey when hazardous activities have taken place on the
site.

The federal government has
jurisdiction on health and safety matters. Building sites must comply with the
requirements of the Health and Safety at Work Act dated 4 August 1996 and of
the Royal Decree of 25 January 2001 on Mobile
or Temporary Sites. This legislation requires a safety coordinator to be
appointed for each building site above a certain size. The safety coordinator
must draw up a health and safety plan prior to the start of the building works.
During the works, he or she must submit regular reports on the health and safety
aspects and must ensure that the health and safety rules are followed to
protect the employees, the subcontractors and any third parties present on the
site. When the site’s works are completed, he or she deposits a
‘post-intervention file’, containing a set of plans and information on the
structural elements of the building and the specifications of the products and
materials used.

26 Project companies

What are
the principal business structures of project companies? What are the principal
sources of financing available to project companies?

A joint venture is often established
to act as special-purpose vehicle (SPV) for a specific project. Depending on
the various factors to be considered when determining an ownership structure
for the SPV (risk allocation, distribution of liability, tax and accounting
consequences, PPP context or not), its business structure may take the form of
a limited liability company, partnership, and so on. The sources of funding may
vary as well and many financing techniques can be combined. Bank debt, through
club or syndicated lending, is often the most important source of project
financing. The European Investment Bank lends in Belgium. Other classic financing techniques
include bond financing, real estate leasing and equity and mezzanine financing.
In PPP transactions, government authorities can provide a guarantee. With such
government guarantee, cheaper financing can be obtained as the government
assumes part of the credit risk and, as a result, (international) investors
will be more interested in participating.

For tax purposes, alternative
financing for real estate and infrastructure investments can be obtained via
undertakings of collective investments (BEVAKI/SICAFI, comparable with US REIT)
and real estate certificates.

27 Public-private partnership legislation

Has
PPP-enabling legislation been enacted and, if so, at what level of government
and is the legislation industry-specific?

There is no general regulatory framework
for PPP contracts under  Belgian law. Whether
the federal Public Procurement Act applies should be determined on a
case-by-case basis. It depends, for example, on the way the PPP project is
structured – either the PPP project is structured under the form of a contract
or an SPV is incorporated. DBFM (design, build, finance, maintain) contracts
are usually subject to the public procurement rules for works, services and
supplies set forth in the Public Procurement Act. In any case, the principle of
equal treatment is generally considered to require that PPP contracts should be
awarded through a competitive and transparent process, even if they fall
outside the scope of the Public Procurement Act.

PPP contracts are generally also
subject to the general terms and conditions for contracts with public
authorities, as set out in the annex to the GTC. The GTC applies to (almost)
all contracts for works, supplies and services and is not adapted to the
particular structure and characteristics of PPP contracts. It is important to
note that all derogations from the GTC have to be listed in the tender documents
and that some derogations need to be explained in the tender documents.
Extending the delay of payment of public authorities is not allowed.

In the Flemish region, a particular
regional decree on PPPs was adopted on 18 July 2003. This statute mainly deals
with public domain issues and does not provide a general legal framework for PPP
contracts. The Flemish regional government has also set up a knowledge centre
for PPPs. This centre has published a DBFM manual, containing clauses for DBFM
contracts under Belgian law. The manual is non-binding, but is an interesting
tool for public authorities, contractors and investors.

Specific VAT consequences of DBFM
contracts have been the subject of a decision of the Belgian ruling commission.
Some tax issues of PPP contracts are still subjects of discussion with the
Belgian tax authorities (eg, VAT and DBFMO contracts).

28 PPP – limitations

What, if
any, are the practical and legal limitations on PPP transactions?

Any PPP transaction aims to be
ESA95-neutral (Eurostat, European System of Accounts – ESA 1995). This means
that the government’s liabilities, including the grant of a government
guarantee to the SPV, have no direct impact on the government’s budget and debt
position.

Another legal issue relates to the
creation of rights in rem, such as long-term leases or rights to build,
on public domain. In the Flemish region, the Decree on PPPs of 18 July 2003
provides possibilities for creating such rights under certain conditions.

A practical problem for sponsors is
that they still encounter difficulties in obtaining long-term loans in today’s
capital markets. In recent transactions such as the PPP for building schools in
the Flemish region, the regional authorities have supported sponsors by providing
a guarantee.

29 PPP – transactions

What have
been the most significant PPP transactions completed to date in your
jurisdiction?

A major European infrastructure PPP
transaction, the Flemish schools financing, closed in June 2010. The project
covers the construction of about 211 primary and secondary schools in Flanders. Each school is serviced by a separate project
company with a debt: equity ratio of 90:10. It features a E700 million six-year
revolving credit facility arranged by BNP Paribas Fortis, KBC and Dexia and a
E1.5 billion 30-year term loan solely underwritten by BNP Paribas Fortis. The
six-year construction financing is set to be refinanced by the E1.5 billion 30-year
facility which carries a guarantee from the Flemish regional government.

Another major PPP project is the
Antwerp Mobility Masterplan which includes the future construction of a bridge
over (or tunnel under) the river Scheldt.

* The author wishes to thank William
Timmermans, Christophe Coudron, Maarten
Van Ingelgem, Kasper Van Landeghem and Stijn Vastmans for their assistance and support.