Sub Concession Agreement

The manner in which dismissal clauses are designed reflects the balance of power between the two parties. An operator with alternative port sites does not easily accept strict termination clauses. On the other hand, a port authority should be aware that an operator could fail the market and a valuable port country may be unused for years if the right to terminate the concession is not clearly defined. Finally, the operator`s lenders should be very careful in analyzing these provisions to ensure that their interests are protected (see Box 46 and Box 47). Example 7: Sub-Saharan Africa: Ifrikya Railway Concession – a case study by Karim-Jacques Budin, SSATP Working Paper No. 64, World Bank, 2003 (English and French) – The case study contains a model of concession agreement (section 3) developed for a sub-Saharan African state. This model contract provides that the use of the rail infrastructure operated by the concessionaire may be open to other railway companies in the circumstances under Article 6 of the concession agreement. Use by third parties would be based on specific lane access agreements between the dealer and the operator concerned, for which a fee for the use of the infrastructure is levied. Also known as concession agreements, concession agreements include different sectors and are available in many sizes. These include hundreds of millions of dollars worth of mining concessions, as well as small food and beverage concessions at a local cinema. Regardless of the type of concession, the dealer normally has to pay the concession fee to the party that grants it the concession fees.

These fees and the rules that allow them to change are usually described in detail in the contract. An operator cannot be held responsible for the full achievement of performance objectives if unforeseen and uncontrollable events occur (force majeure). However, such events should not automatically excuse the dealer of his financial obligations that must be paid under a concession contract. The operator should be encouraged to receive insurance in order to cover as much as possible the risks of such events (see Box 34).