Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
ture. If cross-border rail traffic is likely, consideration should be given to incorporate
Concessionaire obligations to allow for this. Even if the host country is not a
COTIF signatory, COTIF provisions could be a useful benchmark to indicate potential
considerations for bidders, until details of arrangements between the host
country and its neighbors emerge.
The Concessionaire should also meet all safety requirements, and this is another
case of looking at how comprehensive host country legislation is in this respect. If
the Concessionaire must approve safety arrangements, e.g., safety case of Track
Access Holders, or Track Access Applicants, the Agreement should address the
processes to the extent they are omitted from host country legislation.
A disaster recovery plan should be linked to safety issues and agreed between the
Authority and the Concessionaire. The disaster recovery plan should set out reporting
lines (see also section 2.23), and make provision for changes, based on
emerging experiences from incidents or accidents, to be agreed or otherwise addressed.
2.14 Insurances
The Concessionaire should be expected to take out common insurances typically
acquired by any prudent business. Some insurances may be required by law, e.g.,
worker compensation, but other insurances are more important from Authority
perspective, particularly if assets remain or become vested in the state during the
Term, including the following:
• Contractor’s All-Risk insurances during construction; cover during freighting
of equipment or materials, should be considered, particularly if the state is
advancing capital to pay for some of the New Upgrades;
• Insurance on the Below Rail and other Infrastructure;
• Third-party liability cover; and
• Business interruption cover to compensate for lost revenue, which may be
caused on the occurrence of an insured peril. Similar cover should be taken
out in respect of losses that may occur as a consequence of delayed completion
of New Upgrades. It is not unusual under a specific obligation in concession-type
agreements for the private sector party to take out this cover as it
adds to the robustness of the structure being created.
The period and amount of specific covers should be stated and the Authority
should be a named insured.
The Concessionaire should provide an insurance broker’s letter to confirm that
the broker will notify the Authority if, prior to renewal, there is an indication that
cover will not be renewed or that conditions of renewal will be onerous.
Current Insurance Certificates should be produced to the Authority; if the Concessionaire
fails to take out key insurances then the Authority should be able to
take out the insurance and recover the premia from the Concessionaire.
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