Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
• In most cases, the railway will be run as a going concern, which will require
arrangements with third parties that transcend the Expiry Date of the Term.
Any third-party contract that requires the third party to make payments to
the Concessionaire should be structured so that the Authority will receive the
same benefits pro rata as the Concessionaire. Thus, contracts should not seek
front-loaded payments, nor should they seek to impose any back-loaded obligations
that might place the Authority at a disadvantage. In addition, no contract
should be let that conflicts with the Expiry Date within a specified period
of that date without the consent of the Authority.
• As the Expiry Date approaches, the Authority’s interest will heighten in the
maintenance of any concessioned asset. The Agreement should specify the
condition of the Concessioned Assets both during the Term and on Hand
Back and set out the Concessionaire’s obligations in that respect. The Agreement
should also provide that the Authority will inform the Concessionaire of
its handover requirements not less than a specified number of months prior
to the Expiry Date. The Authority’s interest will increase when it has to pay
compensation to the Concessionaire on expiry of the Term, whether under
the terms of the Agreement, under the terms of a further agreement to that
effect in relation to Future Upgrades, or under the law of the host country.
• If the Authority receives the Concessioned Assets at the end of the Term,
which is the common scenario, any maintenance obligations will need to be
monitored, and a mechanism established to accomplish this in a manner that
is as non intrusive as possible.
• If the Authority reasonably believes that the Concessionaire is in breach of
renewal and maintenance obligations under the Agreement, then the Authority
should be permitted to carry out, or procure, a survey of the Concessioned
Assets to evaluate whether the Concessionaire has been and is renewing and
maintaining the assets in accordance with its Agreement obligations. This
right may be restricted to being exercised not more than once during a specified
number of years.
• Where the Authority wishes to carry out a survey, it should notify the Concessionaire
in writing an agreed minimum number of days in advance of the
date on which it wishes to carry out the survey. The Authority should consider
any reasonable Concessionaire request for the survey to be carried out
on a different date. When carrying out any survey, the Authority should exercise
or procure the exercise of reasonable efforts to minimize any disruption
caused to the Concessionaire. Survey costs should be borne by the Authority,
except where the survey results reveal Concessionaire failure, in which case,
the Concessionaire should bear survey costs; or unless the surveys are related
to Hand Back. The Concessionaire should be required to give the Authority,
without charge, any reasonable assistance required by the Authority during
the conduct of any survey.
• If the survey reveals that the Concessionaire has not complied with its renewal
and maintenance obligations, the Authority is likely to require the
powers to do the following:
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