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Amendments to the federal legislation on concession agreements may affect existing transport projects

24 march 2014

On February 11, 2014 a bill № 449127-6 «On Amending the Federal Law" On Concession Agreements "and Certain Legislative Acts of the Russian Federation", aimed at extending the scope of the concession agreements and the creation of favorable conditions for attracting private investments, was introduced to the State Duma. Innovations to the bill, in particular, include the opportunity to enter into a concession agreement under the initiative of a private party.

Thus, the proposal to conclude a concession agreement with the draft of concession agreement may be directed to the Government of the Russian Federation, to a subject of the Russian Federation or to the municipality in which the property is the object of the concession. In the case of the award of the concession agreement and if within thirty days from the date of posting on the official website in the information and telecommunications network " Internet " for posting information about bidding , established by the Government of the Russian Federation , proposals for concluding concession agreement and draft of concession agreement, applications of readiness for participation in the tender for the concession agreement on the terms provided in the proposal for the conclusion of the concession agreement by other persons have not been submitted, the concession agreement shall be concluded with the person from who sent the proposal.

The bill also provides an open list of objects of the concession agreement.

  • The measures aimed at creating favorable conditions for the private partner also include:
  • possibility of establishing payment by concession grantor in respect of the whole list of objects of the concession agreement ;
  • expanding the list of mandatory conditions of the concession agreement , including inclusion of gross proceeds received by the concessionaire under the concession agreement;
  • providing additional guarantees of payback period for concessionaire and obtaining funds ( revenues) , provided by the concession agreement ;
  • ability to change the material terms of the concession agreement at the request of the concessionaire in certain cases, established by the bill ;
  • opportunity to participate on the side of the concession grantor by several persons ;
  • possibility of renewal of the concession agreement for no longer than 5 years;
  • providing prerogative rights to the concessionaire in case objects of concession agreement being listed for sale after the expiration of the agreement term.

One of the controversial provisions of the bill include the ban on the provision of services by the concessionaire on a paid basis provided that grantor payment was established by the agreement. Thus, the bill does not provide in this edition the possibility of collecting funds for the use of toll roads, while such projects are already being implemented or planned for implementation in Russia. (eg, a competition to build a 140-kilometer ( 543 -684 -km ) section of toll M11 motorway "Moscow - St. Petersburg"). In accordance with the statements of representatives of Ministry of economic development, this rule will be worked out at the second reading in the State Duma. The bill expected to be adopted in the spring of 2014.