What is a concession contract?

A concession contract, looks, is basically a treatment between a public entity (yes, the government or the City Council) and a private company. The joke is that the company is given permission to operate, maintain and put money to some public good or service. How long? It depends, but they are usually long years, roll 10, 20, sometimes up to 30 years or more. It is not a little while.

This type of contract is the daily bread in public tenders. Because? Because it allows private companies to get into the world of public or infrastructure services, road roll, garbage collection, water, light, whatever you can think of. And they do it by playing it: they put the money, build, operate and maintain the service or work. In exchange for what? Of being able to get juice exploiting that infrastructure or service. That is, they charge and, if they do well, recover the investment and win pasta.

Normally, the private company that grabs the contract - the “concessionaire”, for friends - takes care of everything: seek financing, build, operate and maintain that invention. And of course, the risk goes from your account. If the thing goes wrong, bad luck. But if it goes well, you can get a lot of profit. Of course, not everything is Jauja, because these contracts are loaded with rules: the public entity puts conditions on the quality of the service, what they can collect, and how much they have to invest in improvements.

The trick? These contracts demand a commitment from the fat. If your company wants to participate in a concession, prepare to be married to the project for years and years, investing time, resources and energy. It is not for cowards or those looking for quick money. But if you go and you like challenges, it can be an interesting play.