Concession Contracts Research Articles

Alternative To Development of Tourist Attraction with Public Private Partnership Scheme in Magelang Regency

This study aims to see how the condition of the object/Tourist Attraction (TA) in Magelang Regency in Indonesia and its alternative development. This research uses a descriptive qualitative approach with case studies of 31 tourism objects which will then be investigated regarding their conditions and possible future developments. Research data were obtained by direct observation of the location of tourist objects and through semi-structured interviews. The results of this study illustrate that tourism objects in Magelang Regency are currently quite developed. However, this has not been able to attract general tourists to linger in the regency and provided an optimal contribution to regional income. This is because tourism objects in the regency other than Borobudur Temple have not been maximized for their existence and utilization. The Public-Private Partnership (PPP) scheme model can be an alternative to be applied in developing tourism objects accompanied by an appropriate Value for Money (VfM) analysis. Tourism objects in the form of cultural heritage can be developed through concession contracts, natural beauty can be developed through management contracts, and artificial objects can be developed through service contracts while taking into account the development needs of each tourism object. Local governments need to establish cooperation with the private sector with a Public-Private Partnership scheme accompanied by the preparation of strict regulations so that the implementation of cooperation in the context of developing tourism objects in the Magelang Regency can bring optimal benefits to all parties.

Comparison of Hydrocarbon Fiscal Regimes of Some European Oil and Gas Producers and Perspectives for Improvement in the Republic of Croatia

Hydrocarbon exploration and production activities are basic to the functioning of the oil and gas industry, while concession contracts and fees are central concepts in the aforementioned activities. The authors consider several questions regarding these concepts, such as: what is the legislative, institutional, and fiscal framework in certain European countries regarding hydrocarbon exploration and production? What are the major differences between them? Finally, is there room for improvement of the framework in the Republic of Croatia? To answer these questions, the authors contacted some of the relevant institutions and accessed official government gazettes, institution websites, legal aggregators, journal articles, books, and different legal publications regarding the oil and gas industry for several European countries, namely the Kingdom of Norway, the Russian Federation, the Republic of Austria, and the Republic of Croatia. As a result, this paper presents an overview of legislation, institutions, concession contracts, taxes, and fees for each of the aforementioned countries. The authors conclude that the Republic of Croatia could benefit from applying some foreign solutions in its own legislative and fiscal framework, i.e., using a sliding scale for royalty calculation and simplifying some administrative procedures.

Highway concessions and road safety:Evidence from Brazil

Reducing road fatalities is a key policy goal in several countries and there is a vast literature on what factors affect road safety performance. Nonetheless, there is limited evidence on whether highway concessions and Public Private Partnerships (PPP) can bring road safety benefits, despite the growing number of countries adopting this type of policy to finance and manage road infrastructure. In this paper, we use a difference-in-differences approach to examine the causal effect of highway concessions on road safety outcomes using daily data from Brazilian Federal highways over 11 years between 2007 and 2017. We exploit the transition from public to private management in some but not all Brazilian states to provide both within- and between-states comparison. We find that concessions promote a small but significant reduction in the number and fatality of road crashes as well as and the number of people and vehicles involved in crashes. Between 2007 and 2017, procured roads had on average 16 fewer deaths then publicly managed highways for every 1000 crashes each year. These road safety benefits only become statistically significant a few years after a concession implementation, but they are marginally larger for every additional year of concession. Finally, our results suggest that including safety-based incentives in concession contracts can substantially improve road safety performance. The findings of the paper have important implications for the social and economic evaluation of road concessions and for road infrastructure policy more broadly.

The Dynamics of Ports Reforms in Nigeria: Implications for Sustainable Ports Operations

Over the time Nigeria economy is largely public sector driven, in which the seaports were not left out: managed by Nigerian Port Authority (NP A). With the seaports under the autonomous of NPA were faced with strangulating problems ranging from inefficiency of it services rendered, insecurity of ships and cargo, lack of modern infrastructures, inefficiency of the NPA staff and excess bureaucracy and sharp practice (corporate) these factors make port tariff on import and export higher than they need to be, couple with the technology trend in maritime transport which required huge capital fund. The government call for ports reforms; a reform that will liberalized and deregulate the seaport by the use of concession contract, this mandate the NPA to transfer terminals operators while NPA concentrates to play the role of landlord oversight functions. The government went further to reform the import guidelines procedures and documentation requirement, changing it form Pre-shipment Inspection (PSI) to Destination Inspection (DI). The Seaport reforms which government introduced in 1996 eliminated the crippling delays in the clearance of import goods in the ports. This research study will examine the dynamics of port operations, the contribution of private operator in seaport operations, and services; technological development: considering the variable attached to seaport operations. Furthermore, this research analyze private sector capital investment in port and maintenance of infrastructures, superstructures and the contract of concession with other practicing nations, while from drawn questionnaire and secondary data the research will examine how and if Nigeria will benefit in the area of capacity building, physical development and if at all there is competition among the terminal operators considering there role in the concession regime. Finally, emphasis and comparison will be laid on cargo throughout, ship tum around, clearing procedures and port charges with the involvement of private participation. DOI: 10.7176/PPAR/11-7-01 Publication date: August 31 st 2021

Evaluating the performance of highway concessions through public-private partnerships using a fuzzy multi-criteria decision-making procedure

This paper presents a procedure to assist the analysis of the performance of highway concessions through public-private partnerships with the combined use of quantitative and linguistic variables, differing from the traditional evaluation that uses only quantitative variables in its applications. The proposed procedure uses fuzzy logic to model the linguistic variables that represent the importance of the performance evaluation categories. The procedure was applied in two Brazilian highway concessions through public-private partnerships, the concessionaires AB Nascentes das Gerais (MG-050, BR-491 and BR-265 highways) and Rota dos Coqueiros (PE-024 highway), in which weights were evaluated among the performance evaluation categories from the perspective of specialists in the field of transport engineering. The two highway concessions present the same categories of performance evaluation (that is, operational, environmental, financial and social), facilitating the application of the proposed procedure. The results show that in the evaluation of the specialists there is a tendency to attribute greater importance to the operational category in relation to the other three categories and that the current concession contracts of the two case studies are not the most adequate to present the weights of categories considering the views of experts.

Crossing the Brownian Bridge: valuing infrastructure capacity expansion policies as real options

In countries where transportation infrastructure is underdeveloped, newly built facilities tend to attract and increase demand. This can lead to situations where future traffic levels exceed the concession capacity limit, and additional investments in expansion is required. One common solution is to mandate this investment as a firm obligation in concession contracts, either after a set number of years or when demand reaches capacity. In this article, we show why these policies are suboptimal and propose a model that combines flexible capacity expansion decisions with conditional term extensions. We model this flexibility under the real options approach and the project value uncertainty during the life of the concession as a Brownian Bridge. As a novel contribution, we take into account the fact that concession revenues are bounded by the current traffic capacity of the road, which represents an upper absorbing barrier that has implications for the expansion decision. As a numerical application, this model is applied to a typical toll road project in Brazil. The results show that flexible expansion policies, coupled with conditional term extensions, have significant advantages. These findings can be of use to government officials involved in developing policies to attract private investment in public infrastructure projects.

Izmene ugovora o koncesiji u pravu Evropske unije

The subject of legal analysis in the paper is a narrow, but very important and specific legal segment, namely the change of the concession contract during its validity. The consideration is based on the analysis of the relevant EU law, with the appropriate use of practice of the Court of Justice of the EU. The ultimate goal was to evaluate the situation of the current EU law, both at the conceptual plan, and in details. The emphasis was in the nature, scope and conditions for changes to the contract and their implications. The paper concludes that the legal regulating of the changes to the concession contract is not an easy task for the regulator. In particular having in mind that this contract cannot be seen only through the prism of internal legal relations between the concession participants, without implications for the third persons and other interests. In such a context the optimum regulating of changes to the concession contract requires a layered legal architecture, mutually coherent, sufficiently clear and predictable, and yet relatively flexible. In that respect, the Directive 2014/23EU, manages to meet the given requirements up to the highest extent in methodological sense and both in terms of regulating and in terms of content. However, due to its generality, most of the given regulation will require specifying through national regulations in the EU Member States, and primarily in the practice of the Court of Justice of the EU. This primarily refers to significant changes to the concession contract.

Maintenance Schedule Optimization Applied to Large Hydroelectric Plants: Towards a Methodology Encompassing Regulatory Aspects

The maintenance schedule planning of hydro plant generating units is a subject of great interest to several agents in the energy industry. A correct approach for this problem can prevent the degradation of physical assets and minimize the probability of forced shutdowns of their equipment. In addition to these factors, due particularities of the Brazilian system, the operational strategies of its agents are also affected by the maintenance schedule of the generating units. This occurs due to the Availability Factor (AFA), which is directly influenced by the hours of maintenance performed at the plant and, in case of a performance below the stipulated in the concession contracts, it can lead to financial losses or administrative sanctions applied by the regulatory agent. With this motivation in mind, the present work proposes a methodology for Generator Maintenance Scheduling (GMS) of a hydroelectric plant, developing a mathematical model to determine the ideal moment to perform maintenance, considering operational restrictions and regulatory aspects of hydroelectric plants. The optimization methodology proposed for this problem is done through mixed-integer linear programming, where the integer variables consist of the operating state and start date of maintenance of each generating unit. In the end, to validate the proposed modeling, a case study is carried out for a real large plant in the Brazilian system.

Limited-Tenure Concessions for Collective Goods

This paper proposes and analyzes the consequences of a widely-used, but little-studied institution, limited-tenure concessions, for governing club goods and common-pool resources. We first show in a simple repeated game setting that such a system can incentivize socially-efficient provision of club goods. We then extend the model to account for spatially-connected resources, an arbitrary number of heterogeneous agents, and natural resource dynamics, and show that the basic ability of limited-tenure concessions to incentivize the first best private provision is preserved in this rich setting that is more representative of natural resources such as fish, water, and game. The duration of tenure and the dispersal of the resource then play pivotal roles in whether this limited-duration concession achieves the socially optimal outcome. Finally, in a setting with costly monitoring, we discuss the features of a concession contract that ensure first-best behavior, but at least cost to the implementing agency.

Developing Organization and Management of Municipal Revenues in the Russian Federation

Budget revenues of public-legal institutions form the financial base providing bodies of state power and local selfgovernance with cash necessary to perform their authorities on organizing overall development of economic and social spheres of territories. The article studies conditions of shaping budget revenue of municipal bodies and analyzes difficulties of municipal budget filling in view of national legislation. Problems in municipal administration work are shown, which are envisaged by the absence of stimuli to effective and efficient functioning of municipal clerks. Practices of participation (people’s) budgeting are described and the impact of this tool on budget revenue shaping is estimated. The article demonstrates possibilities of concession agreements and contracts of state-private partnership, which can decrease the burden on the municipal budget connected with projects dealing with repair and reconstruction of property. On the basis of materials studied by methods of comparative analysis, structural and dynamic analysis of local budget revenues, critical analysis, method of searching for new scientific categories and concepts, logical and deductive methods recommendations were worked out on issues of regulating the missing revenues (tax expenses) and introduction of digital technologies of tax administration.

Implementation of New EU Directives Coordinating the Procedures for Awarding Public Contracts in European Union Member States: The Example of Poland

Abstract This article concerns the implementation of new EU Directives coordinating the procedures for awarding public contracts in European Union Member States. In a number of countries, including Poland, the process of their implementation (Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement; Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport, and postal services sectors; Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts) was delayed. In most cases, the modernization of EU regulations on public procurement required a thorough modification of national regulations in this respect. As a result of the introduction of the package of new Directives, the European Union public procurement market has undergone substantial changes. The need to adjust legal regulations to the changing political, social, and economic situations in a better way has resulted in the transposition of the modernized EU Directives concerning public procurement to the Polish legal system, affecting the final shape of the new Polish Public Procurement Law. The implementation of the package of new Directives has significantly affected the functioning of the Polish public procurement market. For the entities operating in this market, this means the necessity to expand their knowledge, so as to become familiar with the new legal solutions in this respect.

COVID-19 Salgınının Kamu Hizmeti İmtiyaz Sözleşmelerine Etkisi

The coronavirus disease 2019 (COVID-19) outbreak has had detrimental effects on legal transactions and public health. The measures taken to prevent the spread of the outbreak have affected the legal regime of contracts for the conduct of public services and public services. Of these contracts, the public service concession contracts are of particular importance. Hence, by undertaking the risks arising from the execution of the service, the contractor who performs the public service is under the obligation to conduct the service in accordance with the principles dominating the public service. In addition to the liabilities of the contractor, the rights of the contractor are also mentioned in the concession agreement. In terms of our subject matter, the principle of the continuity of public services and the right to ask for the protection of the financial balance of the contract is particularly important. The execution of public service concession agreements becomes very difficult and affects the financial balance of the contract due the COVID-19 outbreak. The contractor, who has to perform public service in any case, may request the administration to meet the obligations that he or she has to bear within the framework of the pandemic following the principle of continuity of public services affecting the financial balance of the contract. This study will thus discuss the French administrative law, which is the source country of the Turkish administrative law regarding public service concession agreements, and developments in the European Union law. Then, the instruments that provide the right to demand the protection of the financial balance of the contract granted to the contractor will be presented under unpredictability, force majeure, and fait du prince in the public service concession contracts affected by the COVID-19 outbreak.

Optimal concession contracts for oil exploitation

This paper studies the relationship between a government and private companies for the exploitation of an oilfield by means of concession-like contracts, i.e. concessions and Production Sharing Agreements. At this aim, we develop and solve a dynamic stochastic optimization problem in a real option framework. The model takes into account crucial as well as actual features of the real world, such as: the twofold goal of governments who must mediate between social interests and revenue maximization from concessions; the incentive for the private party to ”over exploit” natural resources and uncertainty over future payoffs. The results obtained can help policy makers in pursuing the delicate task of setting the ”right” terms of concession-like contracts, meaning that policy makers can have at least a benchmark to start interacting with private parties. This phase is particularly difficult for a number of reasons, such as the need to trade contrasting interests off, high risk of corruption and the fact that negotiations are made difficult by the high level of uncertainty due to incomplete or even faulty information.

Agency problems in public-private partnerships investment projects

This paper examines concession contracts between a private firm and a government in the presence of moral hazard within a real-options framework. The design of optimal contracts to provide incentives to the private firm to exert effort is analyzed. We show that although first-best investment timing can be implemented, contracts often do not provide firms with proper incentives to exert effort, resulting in high-cost projects being undertaken. This problem can be alleviated through the use of a monitoring technology that imposes a penalty on the shirking firm. Although monitoring distorts the investment timing leading to a delayed investment, it increases the government’s profits at the expense of the firm, so that the government finds it optimal to induce effort exertion, increasing the likelihood of low-cost projects. Considering jointly incentives and an exit option, we show that the regular compensation of firms and their compensation upon termination act as substitutes in providing incentives. Governments should set these remunerations jointly in order to minimize the cost of a bailout option for the society.

Petroleum Exploration and Production Contracts as Regulatory Tools: The Kurdistan Region Production Sharing Contracts

The operating activities of the petroleum sector require large amounts of money and high levels of experience and technology that cannot be provided exclusively by most oil-producing countries or their public companies. Therefore, concluding a petroleum exploration and production contract is necessary to address the rights and obligations of the host State and international oil companies; while, various types of petroleum contracts have been developed to address those rights and obligations. In the Kurdistan Region, as an oil-producing region, oil and gas resources are being explored and produced by international oil companies, under production sharing contracts. This study attempts to appraise traditional and modern types of petroleum exploration and production contracts in detail, to examine the fundamental differences and similarities between them; and also to analyse the Kurdistan Region’s production sharing contracts. This research has clarified that the traditional contracts of different types of petroleum contracts are quite different, however, the modern contracts have many provisions in common. Therefore, currently, the choice of contract type might be less important than the content of particular contractual provisions. Finally, the research has clarified that the Kurdistan Region’s production sharing contracts comprise several positive provisions that have attracted a wide range of international oil companies to invest in the Kurdistan Region. Keywords : The Kurdistan Region of Iraq, The Kurdistan Regional Government, Production Sharing Contract, Concession Contract, Service Contract, Joint Venture Contract, International Oil Company, Traditional and Modern Petroleum Contracts. DOI: 10.7176/JLPG/101-17 Publication date: September 30 th 2020

Public Transport tendering and contracting arrangements in countries under regulatory transition: The case of Cyprus

Competitive Tendering is perhaps the preferred approach for procuring Public Transport (PT) passenger services in the EU, according to its legislation. Cyprus has initiated a few years ago the second PT reform cycle which will be concluded with the awarding of six new concession contracts for passenger services by bus. This paper presents and discusses the two PT reforms in Cyprus. The aim of the second reform is to significantly increase the PT share by improving service availability and quality through the transition from a monopolistic to a more competitive PT market. According to the roadmap prepared by the Cypriot authorities, specific contracting arrangements have been set to attract both local and international PT operators to the competitive tendering process. These arrangements mostly pertain to the eligibility and selection criteria of the tendering process, the opportunity to lease PT buses from local companies and the contract type and duration. The paper sets five main questions addressing critical issues of the reform effort and provides responses through the in-depth analysis of the selected tender and contractual arrangements. Useful findings and conclusions may be drawn, especially regarding the effect of small size market and the lack of necessary PT infrastructure.

Application of an incentive for bus drivers to achieve an improvement in the quality of service

Concession contracts of operating companies of the public transport system of Santiago, consider important fines if companies fail to comply with the operating plan, regularity and other operational variables included in those contracts. On the other hand, drivers receive a fixed payment with no pecuniary incentive related with their performance.The main objective of this paper is to analyze the application of a monetary incentive for bus drivers focused on increasing the number of passengers transported to test the existence of multitasking, specifically checking the behavior of drivers regarding bus speed.We conducted a field experiment with an operator of Transantiago and we used a difference in differences analysis to show that with the pecuniary incentive tested, drivers raised their transported passengers in 9% when riding in long bus routes. We found some evidence of multitasking associated with a decrease in speed of 3%. Thus, our research provides suggestive evidence that inefficiencies may be occurring in the operation because of the lack of adequate incentives for drivers.

Modernizing the lending facility under concession agreements

Subject. The article addresses modernization of lending facilities under concession agreements. It is important for evaluating the terms of credit transactions, effectiveness of credit projects, and the concessionaire's ability to repay the loan. Objectives. The purpose is to review the current financing mechanism and underpin approaches to improving the credit facilities within concession agreements. Methods. The study rests on general scientific methods, like the systems and logical analysis and synthesis, principles of induction and deduction, financial calculation techniques. The analytical part employs the balance method, methods of financial coefficients and the method of technical and economic estimates. Results. I analyzed the financial structure and special characteristics of concession agreements, parameters of concessionaires’ activities; considered the types of risks inherent in bank lending under concession agreements, methods for their identification and mitigation; offered a mechanism of lending, including the structure of credit transactions, restrictions for the financial condition of concessionaires, additional requirements and penalties for their non-fulfillment. The findings can help banks define lending parameters for concession agreements. The provided recommendations may be useful for consideration by the authorities of the constituent entities of the Russian Federation. Conclusions. It is possible to reduce the risks of lending under concession contracts, if their terms and conditions are stable, and if the lost income of concessionaires is compensated in the event of early termination. Reasonable tariffs for works and services and increased revenue collection will promote this type of lending.

Optimal choice of capacity, toll, and subsidy for build-operate-transfer roads with a paid minimum traffic guarantee

Abstract Government sectors often provide guarantees in build-operate-transfer (BOT) roads to attract private investments. Since a fiscal burden would be incurred from the contingent liability of issuing a guarantee, charging a fee for the guarantee is considered an effective remedy for management of contingent liabilities in practice. This study incorporates the charge mechanism for minimum traffic guarantee (MTG) into consideration, and proposes a method to choose the optimal concession contract variables with a paid MTG. We find that the government sector will specify a lower toll and a higher capacity for a BOT road with a paid MTG. As a result, the society suffers a social welfare loss when providing a paid MTG. Meanwhile, both the charging fee of an MTG and the guaranteed traffic volume would increase the loss of social welfare, which means the incentive mechanism of private participation and the management of contingent liabilities (charging fee for MTG) are all at the expense of social welfare. Moreover, since the welfare loss is magnified under a high marginal social cost condition, the government should set the charging fee and guaranteed traffic volume according to the marginal social cost level. In addition, to obtain more insights, this paper has made two extensions to further investigate the effects of a paid MTG (1) when contracting with a risk averse private investor; (2) when the concession period is an endogenous variable. Based on our model results, this paper derives several policy implications regarding BOT contract design when a paid MTG is provided.

Administração pública e fiscalização de concessionárias: um estudo de caso

A falta de capacidade do Governo do Estado Brasileiro para prestar serviços públicos básicos, levou a necessidade de empregar o mecanismo de concessão conforme previsto em lei, onde o poder concedente fixa a tarifa máxima a ser cobrada pelos serviços e regula e fiscaliza a qualidade do mesmo, a partir de um conjunto de parâmetros a serem fiscalizados e mencionados no contrato da concessão. O objetivo do presente trabalho é apresentar um procedimento útil para a Administração Pública avaliar os serviços básicos em sistema de concessão, a partir de informações obtidas dos usuários. Trata-se de um trabalho teórico-empírico embasado numa pesquisa bibliográfica e na Legislação pertinente, e inclui uma pesquisa de campo, onde foram utilizados questionários semiestruturados, aplicados juntos aos usuários diretos e indiretos do sistema de transporte público urbano por ônibus. Confirmando o referencial teórico analisado, a opinião dos usuários se firmou como fonte fidedigna para avaliar a qualidade dos serviços, se mostrando um bom instrumento para fiscalização de concessões de serviços públicos.