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. At best, concession agreements are a form of outsourcing that allows all parties to benefit from comparative advantages. Often, a country or company has resources that lack the knowledge or capital to use it effectively. By outsourcing the development or exploitation of these resources to others, it is possible to earn more than they could on their own. For example, a country may lack capital and technical capacity to exploit offshore oil reserves. A concession contract with an oil multinational can generate income and jobs for that country.
Model concession agreements (MCAs) have played an important role in decouping the complexity of these transactions. Using a standardized form for concession agreements reduces unnecessary delays and transaction costs. It also simplifies the bidding process and inspires the confidence of bidders and financiers who invest in infrastructure development. In addition, compliance with WAB standards reduces the costs and risks of small governments and private parties carrying out small projects at the local level, as in most cases they do not have the same expertise as the agencies and forums that develop THE ETCs. The concession should not be confused as part of a concession contract with a lease agreement. A „leasing“ is an interest in a real estate, while a „concession“ is a license to operate on the property, but has no intrinsic property rights. Complex private financing initiative (PFI) projects may include a concession agreement granting private contractors the right to use certain assets. However, when these rights are transferred, the government or judicial authority may set certain expectations about the extent of the maintenance and investments made, as well as the operational standards to be met.
Example 3: United Kingdom – Channel Tunnel Link (High Speed 1) – Concession agreement between the Secretary of State for Transport and High Speed 1 Limited (HS 1 Limited). The agreement covers the design, construction, financing, operation, repair and maintenance of the high-speed rail link linking St Pancras station in London to the Channel Tunnel, which is connected to international high-speed lines between London and Paris and London and Brussels. The European Union and national legislation require third-party access. In India, the Supreme Court recognized the doctrine of essential facilities for concession agreements in the case of VST Industries Limited against VST Industries Workers` Union and Anr. In this case, the Supreme Court held that a private body controlling or operating infrastructure in India under a concession agreement should be considered a public service and that these entities are required to act in the public interest. Example 8: Review of Selected Rail Concessions in Sub-Saharan Africa – World Bank Report, 2006 – Appendix C of the report contains a comparative revision of contractual clauses relating to access to third-party channels for various concession/farming agreements [Camrail (Cameroon), Sitarail (Ivory Coast – Burkina Faso), Madarail (Madagascar) and Transrail (Madagascar) and Transrail (Senegal) and Transrail (Senegal) (Senegal)