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New model concession agreement for ports proposed

By Niranjan Mudholkar,

Added 23 September 2016

Aimed to attract more private sector investment.

The salient changes proposed in the Revised Model Concession Agreements are:

1.      Change in equity holding to provide exit route:  The revised MCA has proposed that the Concessionaire shall hold 51 per cent equity until 3 years after Commercial Operation Date (COD) and 26 per cent thereafter for another 3 years. Hence, the private party would be free to exist after 6 years from COD. The Concessionaire may approach the Concessioning Authority to waive the equity holding requirement during the second 3 year term if performance parameters have been achieved during the first three year period.

2.      Providing for refinancing provision in MCA: This amendment is aimed at facilitating availability of low cost long term funds to Concessionaire so as to improve the financial viability of the projects and is based on the Model Triartite Agreement approved by Department of Economic Affairs.  Under this, the Concessionaire can issue Bonds on completion of one year of operation for refinancing of debt, this will in result in optimization of the finance cost of the projects.

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