What Is the Use of Concession Agreement

Example 7: Sub-Saharan Africa: Ifrikya Railway Concession – Case Study by Karim-Jacques Budin, SSATP Working Paper No. 64, World Bank, 2003 (English and French) – The case study contains an example of a railway concession contract (Section 3) designed for a sub-Saharan African State. That model contract provides that the use of the railway infrastructure operated by the concessionaire may be open to other railway undertakings in the circumstances referred to in Article 6 of the concession contract. Use by third parties is based on access agreements to specific lanes between the concessionaire and the operator concerned, for which an infrastructure charge is charged. Both types of concession contracts involve a transfer of “operational risk” to the contractor, i.e. the risk that demand or supply is not sufficient to make the service or work a profitable business. Concession contracts usually exist between the governments of countries and private companies or companies. Joint concessions between governments and individuals are as follows: A common space for concession contracts between governments and private companies includes the right to use certain parts of public infrastructure, such as railways .B. Rights can be granted to sole proprietorships – resulting in exclusive rights – or to several organisations. As part of the agreement, the government could have rules for construction and maintenance, as well as ongoing operating standards. Typically, concession contracts include some of the conditions given when a private company is granted exclusive rights to use a property, including maintenance of utilities, repair if necessary, and other compensation. Example 5: Brazil – Railway concession related to mining (Portuguese with summary in English) – Concession agreement between the Brazilian State and a consortium of several mining companies.

The concession contract grants the concessionaire a 30-year concession for the development and operation of a 1,674 km railway line that serves as a freight link to the main ports in the region. The concession contract requires access to a certain volume of intercity passenger transport (9.1 XX). The concessionaire is also required to engage in “reciprocal traffic” (i.e. grant access rights to other rail operators on a reciprocal basis). If the concessionaire cannot engage in “reciprocal traffic”, it must enter into track access agreements with third-party users. Such contracts must be submitted to the transferring authority in order to prevent the abuse of economic power (9.1 XXII). A concession or concession contract is the granting of rights, land or property by a government, local authority, company, natural or legal person. [1] Also known as concession agreements, concession contracts cover various industries and are available in many sizes. These include mining concessions worth hundreds of millions of dollars, as well as small food and beverage concessions at a local cinema. Regardless of the type of concession, the concessionaire must generally pay the concession fee to the party granting the concession fee. These fees and the rules by which they can change are usually described in detail in the contract. Reading the article, I wondered why a company would do such a thing.

However, I can understand why a government would make concessions if it really had to do business with the other side. Concession (or franchise) agreements may also be relevant to the broader issue of access to tracks if they require the concessionaire to grant access to other operators in exchange for the payment of an access fee. When it comes to contracts with foreign companies, a concession contract is established between the company and the government of the country in which it wishes to do business. The government may want to create incentives for the business by reducing taxes, easing restrictions, or offering other incentives. In cases where the government is not as enthusiastic, the company may have to make concessions, for example. B, transfer a portion of the profits to the government or pay a special tax rate that may be higher than that of domestic companies. Once the agreement is negotiated and signed, the company has the right to do business locally in accordance with the terms of the agreement. .