China's Belt and Road initiative has opened up numerous investment opportunities in the developing countries along the route. Governments the world over, and particularly in developing jurisdictions, are using concession arrangements in order to help plug their infrastructure gaps. In this publication, we will look at concession arrangements and the benefits of tendering for investors in Belt and Road countries.
Under a concession, a government can licence a private company (Concession Holder) to finance, develop and operate infrastructure for a specified period of time. At the end of this period, often the infrastructure is transferred to the State at no cost. By licensing the private sector to build and operate public infrastructure, governments are able to get closer to meeting their public infrastructure objectives, without placing further pressure on already stretched budgets. Such licences, or concessions, are often granted to an investor following a competitive tender process.
