Concession Agreement In Nigeria

The payment of royalties/concession fees is a major concern of a grantor. The licensor also wishes to ensure that in the event of non-payment, the licensor has the right to enter the project. Finally, at the end of the grant, the grantor would ensure that those rights, combined with the project`s assets, accrued to the licensor. b. Project sponsors: The project sponsor can be a single entity or a consortium of foreign or local investors, or both, due to the huge financial effort of most concession projects. These sponsors usually want to maximize the gains while minimizing the risk. To do this, sponsors pool resources to create a special purpose entity as a project company for the execution of the concession. Even if the proponent is a single entity, it may be desirable to operate the concession through a special purpose vehicle in order to separate the concession from its other activities. When negotiating the concession contract, the limited partners wish to ensure that they support the Concessionaire project company, especially in the initial phase. This is usually done through equity contributions and guarantees on behalf of the project company. The promoters also wish to protect their investments in the project company and obtain assurance that the licensor would not grant competing rights to the concession, that the licensor would not expropriate its investments in the project company and the possibility of freely recovering the profits of the project. If the sponsors are a consortium, each sponsor wants to ensure that they are only exposed to the amount of their own funds contribution to the project, rather than having the cost of the entire project on their balance sheet.

Over the years, Nigerian governments have implemented different PPP projects under different models.9 Murtala Muhammed Domestic Airport Terminal 2 (MMA2), the domestic terminal of Lagos International Airport and its ancillary facilities, has been implemented under a Build-Operation Transfer Agreement (BOT) between the Federal Government, represented by the Minister of Aviation, the Federal Aviation Authority of Nigeria and Bi-Courtney Aviation Services Limited, developed. as a dealer. Katampe District Infrastructure was carried out as part of a PPP model for design, construction, financing and transfer between the federal government, represented by the Federal Capital Development Authority, and a private partner, Deanshanger Project Ltd. Concession contracts are different in the form that deepens to the needs of the licensor, for example, the concessionaire may be required to design, build and operate the infrastructure and then return the property to the concessionaire at the end of the concession period (design, construction, Own and Transfer – DBOT), while some indicate that the concessionaire is only building (or rehabilitating), operate and transfer the infrastructure (Build Operate Transfer – BOT), the design phase being left to the contracting authority. . . .