Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
Host country law will determine whether to include a provision that requires the
Concessionaire to carry out its obligations in accordance with the law, including
the law on safety. If Concessionaire failure to observe the law might cause loss to
the Authority, it may be appropriate to require the Concessionaire to observe the
law. Otherwise relevant government enforcing arms would be responsible to enforce
the law if the Concessionaire were in breach. Nevertheless, the Agreement
should include provision for the Concessionaire to perform in accordance with
Good Industry Practice, which might be defined as, “in respect of any undertaking
in any circumstances, the exercise of that degree of care, foresight, prudence,
and skill that would reasonably and ordinarily be expected from a competent,
skilled and experienced person in the same type of undertaking in the same or
similar circumstances.”
The issue of rail passenger traffic depends upon the structure chosen. If the Concessionaire
is to supply infrastructure services, it may be an option for the Concessionaire
to supply infrastructure to a service level suitable for passenger traffic.
This could be addressed under a separate services contract, particularly where
the potential exists under the Agreement, for the Authority to have power, on notice,
to remove certain of the Below Rail Infrastructure from the category of Concessioned
Assets and place them with another services provider if the parties fail
to agree on changes to the pricing structure or scope of the services. If the
Authority does wish to include passenger transport services within the Agreement
then it will need to include provisions relating to such matters as fare and
service levels, stations/other stops, and passenger claims and complaints.
The level of detail for third-party access and charging regimes in the concession
will depend upon how comprehensive legislation is in the host country—the less
detail in legislation, the more the detail required in the Agreement. Similar issues
relate to a Track Access Applicant’s requests for access, and a Track Access
Holder’s requests for increased access. Analogous issues arise in relation to regimes
for failure to give access, failure to give access to agreed paths, delays in
journey time, and the like.
The risk of an arbitrary regulator decision will be of particular concern to the
Concessionaire where, in cases regarding terms of access, there could be either or
both an increase in the Concessionaire costs and tariffs, which could reduce Concessionaire
income. These issues, which concern both Concessionaire and Funders,
might be addressed under Compensation Events. Although achieving a balance
is difficult—the role of the regulator is to ensure that Concessionaire revenues
are sufficient to meet its obligations, but not to the extent that ensures compensation
for poor Concessionaire management decisions.
Should access be given to infrastructure other than track? For example, should
access be given to maintenance or rail freight depots? Should passenger train operators
be given access to stations? Similar to situations discussed earlier, the
detail required in the Agreement depends on whether host country legislation is
comprehensive.
Another issue is international third party access. This does not affect ‘islanded’
systems with no cross-border link or no plans to link in the near or medium fu-
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