An Agreement Made By Making Concessions

Also known as concession agreements, concession agreements include different sectors and are available in many sizes. These include hundreds of millions of dollars worth of mining concessions, as well as small food and beverage concessions at a local cinema. Regardless of the type of concession, the dealer normally has to pay the concession fee to the party that grants it the concession fees. These fees and the rules that allow them to change are usually described in detail in the contract. For example, there is a concession contract between the French and British governments and two private companies via the Channel Tunnel. British Channel Tunnel Group Limited and France-Manche S.A. operate the Channel Tunnel, often referred to as “Chunnel” as part of the agreement. The tunnel connects the two countries and allows the transport of people and goods between them. It is 50 km long and is 38 km under the English Channel. The Channel Tunnel is therefore the longest underwater tunnel in the world and an important part of the public infrastructure. Concession agreements can also be used to manage risk. Suppose a country invests a significant amount in the production of a single product.

In this case, that country will have a particular high risk in terms of the price of that commodity. For example, the Brazilian and Mexican governments have invested heavily in state-owned oil companies. The value of their assets and income fell significantly when the price of oil fell in 2020. Countries that make concessions lose revenue from concession fees, but do not risk as much capital. The terms of a concession contract depend largely on his desire. For example, a contract to operate a food concession in a popular stadium cannot offer much to the dealer in the kind of incentives. On the other hand, a government that wants to attract mining companies to an impoverished area could offer significant incentives. These incentives could include tax breaks and a lower royalty rate. In the private sector, the dealer – the dealer – usually pays either a fixed amount or a percentage of the income to the owner of the business from which he operates. [2] Examples of concessions within another company are concession stands in sports facilities and cinemas, as well as concessions in department stores operated by other retailers. Short-term concessions can be granted as advertising space for periods as short as one day. The company has already made several payment concessions.

Complex private financing initiative (PFI) projects may include a concession agreement granting private contractors the right to use certain assets. However, when these rights are transferred, the government or judicial authority may set certain expectations about the extent of the maintenance and investments made, as well as the operational standards to be met.