Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
certain assets would be more appropriately kept within another system, and a
transfer can occur to or from the concession.
The right granted also needs to be considered. Funders will want to know
whether the use of the Concessioned Assets is exclusive to the Concessionaire and
cannot be claimed by third parties or used by others, except as specifically envisaged
within the terms of the Agreement. The public sector will want to know that
the assets will be available to meet any public service obligation in the event of a
serious Concessionaire default. Thus, the concession rights might be an exclusive
right to operate and the assets will remain vested in the state; any assets the Concessionaire
develops in the future will become vested in the state as soon as such
assets are put into use. In some jurisdictions, the state will lease real and moveable
property to the Concessionaire, but this would not be an option if the law
offers protection from lease termination, particularly if a company becomes insolvent.
Other considerations include whether the state wishes to allow the Concessionaire
to claim capital expenditure against profits (capital allowances) and what
interest in the assets the Concessionaire must hold to obtain those allowances.
If assets are vested and are to be vested in the state, a mechanism is needed to
allow temporary removal of assets that are in need of repair and renewal, or when
assets are removed for replacement, a transfer to the state of replacement assets.
To the extent possible, the Authority should offer no warranties and should exclude
all liability in relation to asset condition. If the Concessionaire adopts previous
designs of New Upgrades prepared by or on behalf of the state, liability for
those designs should be excluded on the basis that all bidders will have had time
to validate the designs.
If an inventory of spare parts exists for the overall system, not just the concessioned
railway, then a split of the inventory should be carried out and allocated as
appropriate among the Concessionaire and others.
Emergency access points to rail infrastructure may be required, and rights
granted to the Concessionaire to pass over adjacent lands to access rail infrastructure.
Similar arrangements may be necessary to carry out repairs and renewals
and to access watercourses, if required by drainage arrangements.
The nature of the concession needs to be set out:
• Is it a right and obligation to renew, maintain, and operate the Below Rail
Infrastructure for freight?
• Is it a right to operate freight services?
• Is it a right and obligation to renew, maintain, and operate the Below Rail
Infrastructure for rail passenger services?
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