Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
• Will international third-party access be required as soon as the State has
signed cross-border agreements with governments of adjacent countries?
• If there is to be third-party international access, would it be useful to adopt
the working assumption for the Concessionaire that the treaty rules will follow
a precedent? Would COTIF (Convention Internationale sur le Transport
International Ferroviaire) be useful as a guideline to identify a future access
regime?
• If Border Crossing Points must be expanded and updated as a Future Upgrade
but are as yet unknown because they will depend upon treaties with adjacent
states, should the state pay capital costs of Border Crossing Points?
• When will an environmental audit be carried out? Both public and private
sectors should understand the status of pre-existing environmental conditions
before the tendering process commences. The worst scenario would be
if the environmental audit is carried out after concession rights are already
granted and in effect.
The answers to these questions will be reflected in the Concession Agreement but
any particular solution does not imply that a given structure, including a financial
structure, is inherently preferable. The suitability of various structures, including
trade-offs between cost, complexity, and risk, should contribute to overall public
sector appraisal of any reform proposals and, if a concession option is adopted,
any subsequent bidder’s proposal. However the nature of the Concession Agreement
is such that documentation will be reasonably comprehensive; if a simpler
transaction is adopted then the approach can be simplified. This Guide aims to
encourage users to consider all of the issues; it is not meant to be prescriptive.
The award of the Concession may arise from an unsolicited bid (although an unsolicited
bid may not achieve the best outcome), or from competitive tendering.
As indicated in Chapter 13, the process for tendering needs to be carefully considered
to achieve the best value for money while encouraging private sector initiative.
On simple projects it may be possible to send out a form of contract that is to
be signed by each of the bidders; the winning bid is then countersigned by the
public sector, which becomes the contract. For more complex matters greater
flexibility will be required but negotiations should be avoided after final offers are
received.
The Guide it is intended to provide users with a conceptual framework within
which to consider the various issues, many of which are inter-related. Therefore,
the conceptual framework includes the concession of infrastructure with a right
to operate rail freight services. Passenger transport services are assumed to be
permitted over the rail infrastructure, but the rail passenger service franchise
would be dealt with separately (for the Railway Passenger Service Guide see Annex
5). However third-party access is required over the rail infrastructure. For
examples of Railway Concession Agreements please refer to the PPP in Infrastructure
Resource Center. 132
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