Concessions And Agreements

Concession agreements, also known as concession agreements, cover different sectors and are available in many sizes. These include mining concessions worth hundreds of millions of dollars, as well as small food and beverage concessions at a local cinema. Regardless of the type of concession, the concessionaire must normally pay the party granting the concession fees. These fees and the rules that allow them to change are usually described in great detail in the contract. Concession contracts are sometimes used to exploit other nations. For example, in the nineteenth and early twentieth centuries, foreign countries and companies forced China to grant various concessions. These concessions have given foreign companies the right to develop and operate railways and ports in China. Suppose a country invests a significant amount in the production of a single product. This country will then have a high idiosyncratic risk related to the price of this raw material.

For example, the governments of Brazil and Mexico 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 grant concessions may lose revenue from concession fees, but they do not risk as much capital. A common area for concession agreements between governments and private companies involves the right to use certain parts of public infrastructure, such as railways.B. Rights can be granted to individual companies – which creates exclusive rights – or to several organizations.

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