ELP`s infrastructure practice, which is now 15 years old, has had the privilege of advising various clients in different sectors, including the transport sector (ports, roads, airports, railways and metros). After working hard with our clients on concession contracts, our ELP infrastructure team reviewed these agreements from a 360-degree view and identified pressing issues that could arise during the agreement`s lifecycle. A concession contract is a contract between a government agency and a private body where by which the government of the private body establishes certain rights for a limited period of time. These agreements are common in the development of infrastructure projects under the public-private partnership (PPP) model. In this context, the concession contract is an agreement by which the government grants a private body rights for the implementation of an infrastructure project. In 2015, a committee chaired by Vijay Kelkar was created to revive the PPP infrastructure model. In its report, the Committee recommended the development of a review and renegotiation mechanism to introduce flexibility into concession agreements. Concession contracts are essential for infrastructure development in the country. WABs have been very useful in simplifying concession agreements. It has reduced the delays and costs associated with the implementation of such agreements. However, the excessive rigidity of the MWC structure harms the interests of private companies and prevents them from investing in the infrastructure sector.
Efforts should be made to allay fears about misallocation of risks and allow for a renegotiation of concession agreements, in line with the recommendations of the Kelkar Committee`s report. Concessions are a particularly viable way to implement PPPs when public or local authorities need to mobilise private capital and know-how to complement limited public resources. Under a concession agreement, ownership of the project assets remains in the hands of the Authority, while constructive ownership of the asset is transferred to the concessionaire, as well as certain rights and obligations relating to the project. Upon expiry or termination of the concession contract, all asset values of the project (including assets acquired by the concessionaire for the purpose of the project) shall be returned to the Authority. In India, the Supreme Court adopted the doctrine of the main agencies regarding concession agreements in VST Industries Limited v VST Industries Workers` Union and Anr. In this case, the Supreme Court ruled that a private entity that controls or operates infrastructure in India under a concession contract should be considered a public service and that such entities were required to act in the public interest. . . .