Overview of Concessions, BOTs, DBO Projects A Concession gives a concessionaire the long term right to use all utility assets conferred on the concessionaire, including responsibility for operations and some investment. Asset ownership remains with the authority and the authority is typically responsible for replacement of larger assets.
Assets revert to the authority at the end of the concession period, including assets purchased by the concessionaire. In a concession the concessionaire typically obtains most of its revenues directly from the consumer and so it has a direct relationship with the consumer.
A concession covers an entire infrastructure system so may include the concessionaire taking over existing assets as well as building and operating new assets. The concessionaire will pay a concession fee to the authority which will usually be ring-fenced and put towards asset replacement and expansion.
A concession is a specific term in civil law countries. The conceding authority transfers the right to use fixed assets and rolling stock for passenger and freight services to the concessionaire. Main obligations of the concessionaire include the upgrading and rehabilitation of the railway infrastructure including signaling and telecommunication systems , rehabilitation of rolling stock, and improvement of the operational performance.
The concessionaire has the obligation to provide open access to other railway operators on a non-discriminatory basis and upon payment of a track access charge. Track access charges need to be approved by the regulator. Find more information on the track access agreement drafted for this railway network. The case study includes a sample railway concession agreement section 3 drafted for a state in Sub-Saharan Africa.
This sample contract stipulates that the use of railway infrastructure operated by the concessionaire may be opened to other railway transport operators under circumstances specified in Article 6 of the concession agreement. Third-party use would be based on specific track access agreements between the concessionaire and the operator in question subject to an infrastructure usage fee. The following Construction practice note provides comprehensive and up to date legal information covering:.
A concession is a form of public private partnership PPP. It is a long term contractual arrangement between a government or other public sector body and a private sector operator who has been awarded the concession. Under a concession agreement, the government grants a private entity—the concessionaire—the exclusive right to build an asset and to operate and maintain it for the agreed term of the concession.
A concession will sometimes just be for the operation and maintenance of an existing asset but is often for the building of a new asset followed then by its operation and maintenance. Alternatively, it may involve both new and existing assets. The term of a concession will typically be 25—30 years.
Concessions effectively transfer the often considerable burden of constructing, or improving and maintaining, infrastructure onto the private sector and, in doing so, help to relieve some of the pressure that public sector budgets are typically under. In some jurisdictions including France , the legal framework for a concession.
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Governments may use this type of concession agreement to provide services which they cannot or will not provide. For example, a concession agreement might be signed with a foreign company to allow it to manage the ports or the borders.
In terms of an operating concession, the agreement gives the company an exclusive right to operate in a venue like a sports stadium, a cruise ship, or a government building. In this case, the company operates a concession which may sell food, accessories, and a wide variety of other products. It must pay an annual fee for the right to operate, or give up a percentage of its income to the venue.
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