PRESENTATION ON

CONCESSION
AGREEMENT
PUBLIC PRIVATE PARTNERSHIP MODEL
MADE BY
nikita pandey
preetam singh
sumit Shekhar
harry singh
CONCESSION AGREEMENT
• The Concession Agreement is the agreement wherein the public-
sector entity grants the private sector entity the right to implement
an infrastructure project.
 CONCESSION
• A concession is in essence a license granted by the relevant public authority
to a private party to undertake the delivery of a public service and in some
cases, appropriate the user charges, the authority for which lies exclusively
with the public authority under law. Along with the grant of such right, a
public authority seeks to pass on certain risks to the private party.
• 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. 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.
The commercial viability of the project determines whether the payment is to be
made by the private party to the public authority (in the form of a revenue share/
concession payment) or vice versa (in the form of grant or annuity payment).
PPP MODEL
DEFINATION
•A Public-Private Partnership, also called a PPP, P3 or 3P, is an agreement between
government agency i.e. local or national government and private sector company.
•Public-Private Partnership refers to the collaboration between government
agency and private sector which can be used to finance, build and use projects,
usually public projects.
•These partnerships are usually found in transport, municipal and environmental
infrastructures and public service accommodation.
ROLE PLAYING
• Government Expected to
provide land for the project site,
regulatory clearances, and a
concession right to the
contractor/ concessionaire
• Private Sector Expected to invest
funds during the construction
and maintenance phases of
infrastructure project
 NEED

•Timely completion of projects

•Solutions for investing in large projects
•Increased feasibility of the projects/programs
•Enhanced transparency and accountability
•Cost-effectiveness
•Higher productivity and efficiency- by linking payments to performance
•Increased employment opportunities
•Clear customer focus
•Improved customer satisfaction
•Recovery of user charges
•Optimum utilization of resources
•Improvement of quantity and quality of services
•Exchange of expertise among the organizations
TYPES OF PPP MODEL
• 1)BOT-build operate transfer
• 2)BOO-build own operate
• 3)BOOT-build own operate transfer
• 4)DBF-design build finance
• 5)DBFO-design build finance operate
• 6)DBO-design build operate
• 7)BLT –build lease transfer
• 8)BTO-build transfer operate
..

9)DBFOM-design build finance operate manage

10)LROT-Lease renovate operate transfer
11)DCMF-design construct manage finance
12)BOOR-build own operate renovate
Models of PPP Explanation Advantages Limitations
This model helps to · Encourage
Build- Own- figure out the source modernism · Applicable only for
of financing, carries · Focus on strengths of large projects
Operate- Transfer out all designs, builds PPP · High transaction
(BOOT) the infrastructure and · Provide an costs
  transfer ownership to opportunity to · Time-consuming
the public agency. expertise
In this model, private
contractors have
Build- Own- Operate control over profits · Development of
· Lack of help from
(BOO) and losses generated
private agency.
public sectors in the
  · Promotes
by the facility, similar privatization process financial crisis
  to a privatization
process.
In this model, the
government gives · Full authority to
Build- Operate- concession to a government · Limited motivation
Lease- Transfer private entity to build · Public service for the private sector
(BOLT) a facility and at the delivery  in an due to the transfer of
  end of the project, effective way ownership
transfer of ownership  
to the government.

 
 This model involves public
owner leasing facility to a
Lease -Develop -Operate private company. The · Provides a platform for · No capital mobilized from
(LDO) private company the private sector to
the private sector
  responsible for perform well.
maintenance and operate
as per specified.

Under this model, the

governments and local
bodies allow the private
agency to rehabilitate · Provides rehabilitation
Rehabilitate- Operate- facility during concession facility to private · Time restriction
Transfer (ROT) period and after the promoters.
 
period; the project is
transferred back to local
bodies.
 In this model, the
· Opens up
private agency domestic markets · Higher cost of
Design, Build, undertakes the
to overseas private capital
Finance and responsibility for competition · Expensive
Operate (DBFO) the operation of
· Brings new ideas procurement
  the project for the from outside public process
period of
sector
concession.
BUILD OPERATE TRANSFER(BOT mode)
…
Build Operate Transfer (BOT Toll):
• In the BOT model, public sector offers work to
a private sector entity to design, build, operate
and maintain these infrastructure facilities for
a certain period of time called as concession
period. During this concession time the private
sector or entity has the responsibility to
arrange the required funds for the project and
is authority to collect revenues generated by
the project in terms of toll from end users. The
service will be then transferred to the public
authority at the end of the concession period,
without any remuneration of the private sector
involved.
Build Operate Transfer (BOT Annuity):
• In this BOT model, public sector offers work to a
private sector entity to design, build, operate and
maintain these infrastructure facilities for a
certain period of time called as concession period.
During this concession time the private sector or
entity has the responsibility to arrange the
required funds for the project and then after
completion of project public authority provide
finance as per decided annuity basis; it may be six
term or one year annuity period, till the
completion of concession period. The service will
be then transferred to the public authority at the
end of the concession period, without any
remuneration of private sector involved.
Build Own Operate Transfer (BOOT):
• In a BOO model ownership of the infrastructure services remains
usually with the project company for example a mobile phone
network. The government grants a franchise to a private partner to
finance, design, build and operate a facility for a specific period of
time. Ownership of the facility is transferred back to the public sector
at the end of concession period. Therefore, the private company gets
the benefits of any residual value of the project. Usually this PPP
arrangement is used when the physical life of the project and
concession period is short
Design Build Finance Operate Transfer
(DBFOT):
• : In this model, the private party assumes the entire responsibility for
the design, construction, finance, and operate the service for the
period of concession and transfer it to public authority at the end of
that period. This model is somehow same as BOT arrangement.
Design Build Operate Transfer (DBOT)
• This model is similar somehow with BOT only funding option is
common when the client has no knowledge of what the project
entails. Basically finance is arranged by public authority. Hence he
contracts the project to a company to design, build, operate and then
transfer it. Examples of such projects are refinery constructions.
Hybrid Annuity Model (HAM):
• The newly launched HAM is a combination of BOT Annuity and EPC
models. As per concession agreement, the government will contribute
to 40% of the project cost in the first five years through annual
payments (annuity). The remaining payment will be arranged on the
basis of the assets created and the performance of the developer.
Here, hybrid annuity means the first 40% payment is made as fixed
amount in five equal installments whereas the remaining 60% is paid
as variable annuity amount after the completion of the project
depending upon the value of service created. As the government pays
only 40%, during the construction stage, the developer should find
money for the remaining amount.
OVERVIEW
• As per Ministry of Finance, Government of India, total 745 PPP
projects are awarded and carried out from year 2005 to 2017.
Following table shows the frequently used PPP models and respective
project awarded in India
CONCLUSION
• The Indian road sector plays a vital role in infrastructure services and
development of county. The Indian government has taken various
steps to enhance the condition of national highways. There are
various PPP models used in road sector, but most commonly used are
Build Operate Transfer (BOT) and Design Build Finance Operate
Transfer (DBFOT). To overcome challenges facing in these models
government of India launched new PPP model in 2015 named as
Hybrid Annuity Model (HAM) and this model is widely acceptable by
public and private sector. The models used in PPP projects are differs
by their risk sharing and responsibility taking consideration between
both sectors.
THANK YOU