What Is The Meaning Of Concession Agreement

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Concession agreements generally define operating time, insurance requirements and royalties. Payments to a landowner may include location rent, a percentage of turnover, or a combination of the two. Additional expectations may also be set out in the agreement. The agreement may specify, for example. B, which of the parties is responsible for procurement, maintenance and repair services. These agreements can be concluded either for the purpose of carrying out an infrastructure project or to provide services related to an infrastructure project. In the private sector, the dealer – the dealer – usually pays either a fixed amount or a percentage of the income to the owner of the business from which he operates. [2] Examples of concessions within another company are concession stands in sports facilities and cinemas, as well as concessions in department stores operated by other retailers. Short-term concessions can be granted as advertising space for periods as short as one day. In essence, a concession is a licence granted by the government authorities to a private body for the performance and performance of public services and, to that end, you grant certain rights for a limited period of time, held exclusively by the government under the law. In return, the state transfers certain risks of exploitation to the private unit. Both types of concession agreements involve a transfer of “exploitation risk” to the contractor, i.e. the risk that demand or supply will not be sufficient to make the service or work profitable.

The question of which party will pay to the other party is determined by the economic viability of the project to be carried out. Depending on economic viability and risk factor, payment can be made by the private party to the government (share of revenue/concession) or vice versa (payment of subsidy or pension). Development of standard concession agreements. The more attractive and profitable a concession is, the more likely it is that a government will offer tax breaks and other incentives. However, the implementation of MDBs also has several drawbacks. Often, the format and language of WABs are copied without proper consideration of the specific implications of each project. The structure of the WAB is rigid. Concession contracts are often complex and long-term and it is not possible to anticipate all the risks that may arise during the execution and operation of the project being implemented. In these circumstances, the lack of a flexible approach undermines the interests of private parties. In the early stages of the PPP model in India, several governments and government authorities developed their own concession agreements. This has led to implementation difficulties. In 2000, the Planning Commission obtained the first standard concession agreement (MCA) for the motorway sector.

Like the planning commission, WABs were then developed for other sectors for other sectors.

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