Concession agreement templates 9 free word, pdf format. This chapter will outline what project finance is, the key features which distinguish it from other methods of financing, the motivations and circumstances for utilising it and. This is an important bidding parameter, if applicable. As per the national policy on publicprivate partnership of the federal government of nigeria, a ppp is defined as a contract, whereby the private sector is engaged by the public. The model concession agreements for various sectors like national highways, state highways, urban rail transit system and ports are available. This practical twoday course, financing agreements in project finance, examines the role of project documents, taking into account the perspectives of the lender, sponsor and offtaker, before moving on to a more detailed overview of the power purchase agreement concession agreement, the turnkey construction contract, and operation and. Publicprivate partnership concessions for highway projects.
This article will study and compare these concession forms and will draw conclusions for infrastructure projects. Feasibility study of the project risk analysis optimum economic, legal and tax structure other sponsor research legal structure coordination between different participants project presentation in the capital markets negotiation with the financial institutions advisory seccion i project finance. Concession agreement the contract document for the project, specifying every element of the project in detail, to be signed between the concessionaire and the sponsoring authority concession period the duration of the ppp contract concessionaire the private partner awarded the tender for the. The optimum position for the lenders in respect of the project agreement itself is as follows. The concessionaire charges the private organization fees, as mentioned in the contract.
Model tripartite agreement for road projects between project authority, concessionaire and infrastructure debt fund this tripartite agreement1 2is made at new delhi on the day of, 201 by and between i the national highways authority of india, established under the national highways authority of india. It may also be possible to structure the project finance document around any problems caused by insurance gaps. Revitalization project, the purpose of this agreement is to grant to the company the exclusive right to finance, rehabilitate, operate, manage. Ppp glossary directorate of institutional finance, govt. In texas, concession agreements and designbuild agreements are referred to as comprehensive development agreements cdas. Project economics and the country and concession environment are key factors that influence the level of govern ment support required for a toll road to attract financing. Standard concession agreement form for bto projects dec. A concession agreement is a contract between a company and a government, or other property owner, to operate a business in a particular location.
Concession agreements for executed ppp projects concession agreements for executed. Summary and status of concession agreements cdadb in. This document has been prepared for the purposes of the ppp. Mechanics of issuance of debt parties, roles and tasks. Dulles greenway comprehensive agreement loudoun county, virginia. Publicprivate partnership ppp project finance transactions. A concession period and price determination model for ppp projects. This guidance booklet booklet is designed to set out the concept and principles of more balanced concessions for the airport industry balanced concession for decisionmakers in government institutions, airports and airlines who. Between project authority, concessionaire and infrastructure debt fund this tripartite agreement1 2is made at new delhi on the day of. Authority under a ppp project, if the project is profitable.
A concession agreement under which a project will be constructed to provide a service to the general public normally provided by the public sector e. Pdf from concessions to project finance and the private finance. For a discussion of the documents typically entered into in a project finance transaction, see practice note, project finance. Then, the draft standard concession agreement for bto projects for 2009 was published by reflecting the revised basic plan for ppps public notice no. Apr 29, 2019 a concession agreement is a contract between a company and a government, or other property owner, to operate a business in a particular location.
The key characteristics of project financing structures a number of typical characteristics of project financing structures are designed to handle the risks illustrated above. Concession agreements for executed ppp projects concession agreements for executed ppp projects. Public and private entities are often involved in business agreements. Funding for private toll roads is primarily in the form of commercial bank loans and sponsor equityfew facilities. The authority had accordingly invited proposals by its notice no.
Design build finance operate maintain dbfom toll concessions. The hambantota port project is a project to develop a regional hub with its. Concession agreement shall commence on the concession agreement effective. A concession agreement is one where a private organization or concessionaire seeks a concession from a government organization for operating a specific business within the governments jurisdiction. Summary and status of concession agreements cdadb in texas. Draft ppp manual for nigeria ppp in nigeria is regulated.
Ppp in infrastructure resource center for contracts, laws and regulations pppirc website. Concession agreement publicprivate partnership loans. A form of financing projects, primarily based on claims against the financed asset or project rather than on the sponsor of the project. The details regarding the mcas for different sectors and its overview can be accessed here. Project structures, procurement and planning process 12 5.
Hipg, the sole and exclusive right to plan, finance, develop, operate, maintain and manage the hambantota port. Usually, a project financing structure involves a number of equity investors, known as sponsors, and a syndicate of banks or other lending institutions that. The research methods adopted in this study include qualitative comparative methods and the comparison and contrast between agreements are performed through extensive study of the relevant literature. Concession commencement date means the date specified as such in the certificate of.
Cdas were first authorized in 2003 with the passage of house bill 3588, which defines a cda as an agreement with a private entity that, at a minimum. Concession assets means all assets of the port included in the perimeter and on which a right of concession is granted to the company under this agreement and which are described in annex 1 and 12. Tariff revenue is expected to be built up over the life of concession. Compare and contrast offtake agreements and concession. Key issues for lenders in project finance agreements. However, there are varying degrees of recourse possible. Public agencies may use p3 project finance concessions to construct new facilities or to expand or rehabilitate existing facilities, such as highways, bridges, or tunnels, that a state dot, local government, or other project sponsor would otherwise have undertaken through traditional project development.
Obviously there has to be real competition for this to work, as could be the case, for example, where there is a parallel free road of reasonable quality, or another seaport. This is central to the bot build, operate, transfer model which sees the project company build the asset, operate it for a. The two bookrunners are leading project finance banks with significant track records in the sector. However, project financing is a specialised funding structure that relies on the future cash flow of a project as primary source of repayment, and holds the projects assets, rights and interests as collateral. Highlights of efsi the european fund for strategic investments 10 4. A contract agreement between these entities include lease agreements, management agreements and concession agreements. In addition to the concession agreement with the host government, loan agreements with the banks, shareholder agreements with investors.
However, there are also concession agreements, which are usually agreements between the government and corporations which give the corporations the right to operate within the governments jurisdiction. Government of andhra pradesh 2 concessionaire contents part i preliminary recitals 4 1 definitions and interpretation 6 1. Financing secured by project assets and revenueproducing contracts, not sponsors. Concession fees means the fees to be paid by the company to the conceding. A concession agreement differs from those aforementioned when it comes to the rights being assigned to the private entity which is similar to a representation agreement. Concession, infrastructure, private project finance, procurement. Repayment is based on the future cash flows of the project. This document has been prepared for the purposes of the. Planning commission developed the first version of the model concession agreement mca. Fhwa center for innovative finance support p3 projects. Project finance is the process of financing a specific economic unit that the sponsors create, in which creditors share much of the ventures business risk and funding is obtained strictly for the.
Concession agreement means this agreement including schedules 1 to 12 inclusive hereto. Project finance is the longterm financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Concession agreements public private partnerships in india. Some concession agreements may not fix the user charges in advance, but rely on competition to ensure that they remain reasonable. What is the relationship between ppp and concessions. Concession agreement a contract between a publicsector body and a project company, which allows the project company to carry out the project e. The private party makes a large upfront payment for the concession, thereby providing cash for the state or local government that can be used to pay off debt, fund other programs and create reserves. Concession means all necessary rights during the concession period to design and build the second crossing, and to finance, maintain and operate both crossings. Concession agreement the contract document for the project, specifying every element of the project in detail, to be signed between the. Nov 12, 2015 the concession agreement runs long enough for the contractor to recover its costs and earn a return. Financing agreements in project finance euromoney learning. The concession business is one of the key focus areas of the. This is central to the bot build, operate, transfer model which sees. In a ppp project in which the authors handled, the government side expressly stated in the bid invitation documents that where the investor in the concession project that has been selected by.
Capital beltway high occupancy toll hot lanes i495 fairfax county, virginia comprehensive agreement cities of norfolk and portsmouth, virginia. Elizabeth river tunnels downtown midtown tunnel comprehensive agreement cities of norfolk. Why is project finance typically used to finance large capital intensive. Usually, a project financing structure involves a number of equity investors, known as sponsors, and a syndicate of banks or other lending institutions that provide loans to the operation. Project finance is a method of raising longterm debt financing for major projects through financial engineering, based on lending against the cash flow generated by the project alone. Government of andhra pradesh concession agreement the. The concession agreement runs long enough for the contractor to recover its costs and earn a return. However, project financing is a specialised funding structure that relies on the future cash flow of a project as primary source of repayment, and holds the project s assets, rights and interests as collateral. Project finance, project agreement, offtake agreement and concession agreement. Concession agreement basic purpose a concession is a bundle of rights conferred on the private entity in return of certain specified obligations to be undertaken risks that are transferred broadly, the ppp contract concession agreement is designed to identify and set out the rights and obligations of both the procuring authority and the. Identifying and allocating risks in international energy and infrastructure. The purpose of this chapter is to provide an overview of project finance.
Project finance the term project finance is often interpreted incorrectly as the generic financing of a project. Public and private infrastructure investment management. A concession is in essence a license granted by the relevant public authority to a private party to. A concession is in essence a license granted by the relevant public authority to a. Overview of the bank loan and project bond markets 7 3. Clews, in project finance for the international petroleum industry, 2016 concessionary systems and licensing the concept of a concession is that one party usually a government but the term also applies to private entities has monopoly rights including but not limited to rights of ownership over some resource or activity. This practical twoday course, financing agreements in project finance, examines the role of project documents, taking into account the perspectives of the lender, sponsor and offtaker, before moving on to a more detailed overview of the power purchase agreementconcession agreement, the turnkey construction contract, and operation and. The private party makes a large upfront payment for the concession, thereby providing cash for the state or local government that can be used to pay. Mar 25, 2016 in a ppp project in which the authors handled, the government side expressly stated in the bid invitation documents that where the investor in the concession project that has been selected by. Financing of private parties to concessions ebrd procurement. An agreement sometimes called a licence or lease under which the gran tor confers on the project company the right for an agreed. Draft ppp manual for nigeria ppp in nigeria is regulated by.
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