Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
to continue to perform their respective obligations under the Agreement insofar
as they are not so affected.
The Agreement may provide that within an agreed period following the occurrence
of a Change in Circumstances, the parties should meet and should, following
an agreed period for consultation, take adequate measures to restore the following:
• Ability of the relevant party to carry out its obligations and duties affected by
the Change in Circumstances; and
• Financial Balance of the Concessionaire, keeping in mind the caution expressed
earlier regarding the use of a financial model.
In the event that the parties fail to reach an agreement within the stated period,
the Agreement might provide for submission to the Disputes Resolution Procedure
(see section 2.30). However if the following conditions emerge:
• The occurrence of a Change in Circumstances continues for a specified period,
or
• A series of related Changes in Circumstances continue in the aggregate for
that specified period during any year,
…the Agreement might then provide that the Concessionaire can opt to terminate
the Term when the specified period expires by delivering a Termination Notice to
the Authority. Upon such termination, provisions relating to termination should
apply (see section 2.24).
2.19 Variations
The structure of the Agreement risks rigidity if it does not allow for Variations,
which would normally fall into two categories. In the first category, the Concessionaire
wishes to change the Concessioned Assets or a New Upgrade or Future
Upgrade during the period of construction or fabrication; the second category
include variations by which the Authority is seeking a change.
In either case, the Agreement should include provisions for giving notices, and
counter-notices. In a Variation proposed by the Authority, the Concessionaire
should be able to reject a request for a change if the Variation would affect safety
or operability. The Authority may be concerned if the Variation could impose additional
financial costs, e.g., increase compensation amounts payable on expiry of
the Term (or earlier termination) or might reduce the benefits of services to be
rendered under the Agreement.
The costs of a Variation should, by and large, be borne by the party requesting the
change. If extra costs can be recovered through additional Track Access Charges
or similar, the main issue will be securing funds to cover the initial costs.
2.20 Preservation of the Concessioned Assets
Typically, common business provisions include the following:
The World Bank Page 269