Concession Agreements in India – The Balancing Act

Private ownership of public assets is a sensitive issue for most governments. However, particularly in the context of developing countries, PPPs emerged as an innovative policy tool for remedying the lack of enthusiasm in traditional public service delivery.

Today, India is one of the most mature PPP markets. As on June 30, 2017 (as per the information available on the government’s infrastructure website), 1572 PPP projects with costs over INR 50,000,000 or approximately USD 785,000 are currently being implemented across various infrastructure sectors in India.

Concessions are an especially feasible way of carrying out PPP projects when state or local authorities need to mobilise private capital and know-how to supplement scarce public resources. Under a concession arrangement, the ownership of the project asset remains with the authority, while constructive possession of the assets is passed on to the concessionaire together with certain rights and obligations in relation to the project. On expiry or termination of the Concession Agreement, all the project assets (including assets purchased by the concessionaire for the purpose of the project) revert to the authority.

In India several models have evolved through the years for grant of concessions in various sectors, including roads, airports, ports, metro, railway station redevelopment, and healthcare as well as information technology. As PPPs evolved across the world, government agencies developed standardised documents setting out the terms and conditions on which licenses were granted to private entities to enable them to deliver public goods and services for public benefit. Similarly, in India, the Planning Commission introduced Model Concession Agreements (MCAs), with the intent to standardise documents and processes for the PPP framework across various projects.

The Infrastructure practice at ELP, now 15 years strong, has been privileged to have advised various clients across various sectors including, amongst others the transportation sector (ports, roads, airports, railways and metros). Having worked extensively with our clients on concession agreements, our infrastructure team at ELP looked at these agreements from a 360 degree view and identified the pressing issues which occur or which could possibly occur during the lifecycle of the agreement.

The ‘Concessions Agreements in India’ guide is our endeavour to give our readers an in-depth view of ELP’s collective cross – practice experience on concession contracts. We do hope this makes for some interesting reading. We enjoy every reader’s opinion and welcome your feedback.