What Is A Concession Agreement In Project Finance

A financial model is developed by the promoter as an instrument of negotiation with the investor and project expertise. This is typically a table designed to process a complete list of bid assumptions and provide expenditures that reflect the expected “real” interaction between the data and the values calculated for a given project. The financial model is well designed to perform sensitivity analyses, i.e. calculating new results based on a series of data variations. The consortium of investors normally builds or develops the airport for a specified period of time and then transfers the facility to the owner. This process, which is very similar to a concession agreement discussed in Section 9.3.1, may be limited to certain parts of the airport, such as terminals or a runway. Table 9.2 has a number of additional features. The choice of the project advisor (who is technically the legal advisor to the project company) is a decision shared by the sponsors. As mentioned above, it is sometimes the law firm preferred by the main sponsor, which can make the greatest investment in the project (and thus in the company of the project), or the sponsor that characterizes the project more than anyone else and/or conditions the project itself. (For example, it may be the sponsor who has the underlying technology that is essential to the project, or the sponsor who is both the customer and the supplier of the raw material.) Contracts to purchase the raw materials needed to operate the project: fuel supply contracts (contracts to purchase fuel for electricity generation projects) are particularly important in this category. An “airport privatization” by management contract is somewhat counterintuitive, as it does not involve participation or transfer of property rights. However, from a historical point of view, it is still considered one of the (albeit rarer) options.

Some aspects of PPP contracts are much more specific for the type of contract (for example. B the concession or PFI model and whether the latter is the type of risk transfer) and the sector in which the project company operates (the requirements for a road differ considerably from those of a school). Therefore, for sectoral issues, such as the service-fee mechanism, including service requirements, it is difficult to develop more than general framework laws or a standard contract form (see Chapter 13). However, if the P3 pipeline is long enough, it is useful to establish sectoral contract forms for these issues. Experience in transferring airports from the public to the private sector shows that the complexity of the process does not allow for a single method of privatizing airport operations to meet the expectations of all stakeholders – investors, national governments, local communities, airlines and old and new airport managements. The main methods and criteria for privatizing airports that can be adopted under current conditions are different. Different approaches to privatization lead to different ownership models, with different government controls at privatized airports.


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