Draft Concession Agreement Meaning

December 7, 2020 in Uncategorized by

A common area of concession agreements between governments and private companies provides for the right to use certain parts of public infrastructure, such as railways.B. Rights may be granted to individual companies, resulting in exclusive rights, or several organizations. As part of the agreement, the government may have construction and maintenance rules as well as current operating standards. At best, concession agreements are a form of outsourcing that allows all parties to benefit from comparative advantages. Often, a country or company has resources that lack the knowledge or capital to use it effectively. By outsourcing the development or exploitation of these resources to others, it is possible to earn more than they could on their own. For example, a country may lack capital and technical capacity to exploit offshore oil reserves. A concession contract with an oil multinational can generate income and jobs for that country. 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. Ownership of the project property is retained by the Authority under a concession agreement, while the concessionaire receives only constructive ownership. Once the contract is terminated, all project resources are returned to the Authority. Concession agreements are very different from other more common trade agreements on the provision of goods and services. Unlike other commercial contacts generally related to private party asset and real estate transactions, concession agreements are intended for public goods and services and are intended to provide essential facilities and services. Apart from that, concession contracts are long-term contracts that usually involve high-quality transactions. Within the European Union, the granting of concessions by public bodies is governed by a regulation. Work concessions have been subject to public procurement rules for some time, as the European Parliament and European Council`s 2004/18/EC Directive on Public Works Concession Contracts is applied and cross-border concessions on services are governed by the principles of the Treaty on the Functioning of the European Union. However, on February 26, 2014, the European Parliament and the European Council have adopted a new 2014/23/EU directive on the awarding of concession contracts[4], which required EU Member States to implement national legislation for the awarding of concession contracts of more than EUR 5,186,000, which was awarded on or after 18 April 2016.