Concession agreement
Also called: Concession · Topic: Infrastructure: Transport, Communications and Energy · NCERT: Beyond NCERT
Meaning
A concession agreement is the contract at the heart of a public-private partnership (PPP). It gives a private party the right to build, operate or use a public asset and to collect revenue from it. That right lasts for a fixed period and comes with set conditions. The agreement spells out who bears which risk, such as construction, traffic, financing or maintenance. It also sets service standards and fixes when the asset returns to the government. To keep terms uniform, the government uses standard Model Concession Agreements.
Example
Under the first toll-operate-transfer (TOT) bundle in 2018, a concession agreement gave a private party the right to collect tolls on 9 national highway stretches (about 681 km) for 30 years. In return it paid about ₹9,681 crore upfront.
Don't confuse with
- EPC contract: here the contractor is simply paid a fee to build. It gets no right to collect revenue and bears no traffic risk.
Related concepts
- Public-private partnership
- Engineering, procurement and construction
- Hybrid annuity model
- BOT-Annuity
- Annuity model
- BOT-Toll
- Build-operate-transfer
- Build-own-operate-transfer
- Build-own-operate
- Build-own-lease-transfer