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Concession Agreement
I need a concession agreement for a public-private partnership project involving the development and operation of a renewable energy facility. The agreement should outline the responsibilities of both parties, include a 20-year concession period, and specify performance standards, revenue-sharing mechanisms, and termination conditions.
What is a Concession Agreement?
A Concession Agreement gives private companies the right to operate public assets or provide public services in the Netherlands. When Dutch authorities want private businesses to run things like toll roads, railways, or water treatment facilities, they use these agreements to set the rules and responsibilities. The government keeps ownership while letting companies manage and profit from the asset.
These agreements typically spell out how long the concession lasts, what fees the company can charge, and service quality standards they must meet. Under Dutch law, concessions must follow EU procurement rules and the Dutch Public Procurement Act (Aanbestedingswet). The private operator takes on most operational risks but must run the service or facility in the public interest.
When should you use a Concession Agreement?
Consider a Concession Agreement when your public authority needs private sector expertise to operate major infrastructure or services. These agreements work particularly well for Dutch municipalities managing assets like parking facilities, waste management systems, or public transport networks where specialized private operators can bring efficiency and innovation.
The timing is right for a concession when the public sector wants to maintain ownership but lacks the operational capacity or funding to run the service effectively. Dutch law requires these agreements for projects above EU procurement thresholds. They're especially valuable when seeking long-term partnerships where private operators can invest in improvements while ensuring public access and fair pricing.
What are the different types of Concession Agreement?
- BOT Concessions: Operate major infrastructure where private partners Build-Operate-Transfer assets back to Dutch authorities after 20-30 years
- Service Concessions: Cover public services like waste management or transport, focusing on operational excellence rather than asset development
- Revenue-Based Concessions: Used for facilities like parking garages or toll roads where private operators collect user fees
- Mixed Concessions: Combine service operation with infrastructure development, common in municipal utility projects
- Social Concessions: Specifically for operating public facilities like swimming pools or community centers with strict public access requirements
Who should typically use a Concession Agreement?
- Government Authorities: Dutch municipalities, provinces, or national agencies who own the public assets and grant concession rights
- Private Operators: Companies specializing in infrastructure or service management who run the concession and invest capital
- Legal Advisors: Dutch lawyers who draft and review Concession Agreements to ensure compliance with EU and local regulations
- Technical Consultants: Experts who define operational standards and performance metrics
- Financial Institutions: Banks and investors who provide funding for concession projects and review agreement terms
- Public Users: Citizens who use the services or facilities operated under the concession
How do you write a Concession Agreement?
- Asset Assessment: Document the public infrastructure or service scope, current condition, and performance requirements
- Financial Planning: Calculate expected revenues, operating costs, and required investments over the concession period
- Legal Framework: Review Dutch procurement laws and EU regulations that apply to your specific concession type
- Performance Metrics: Define clear, measurable service standards and quality indicators
- Risk Analysis: Map out operational, financial, and legal risks between public and private parties
- Stakeholder Input: Gather requirements from technical experts, financial advisors, and end-users
- Duration Terms: Determine concession length and conditions for early termination or extension
What should be included in a Concession Agreement?
- Parties and Purpose: Full legal names of public authority and private operator, plus clear concession objectives
- Asset Description: Detailed specification of infrastructure or service scope being concessioned
- Duration Terms: Concession period, extension options, and termination conditions
- Financial Terms: Fee structures, revenue sharing, and payment mechanisms
- Performance Standards: Specific service levels, quality metrics, and monitoring procedures
- Risk Allocation: Clear division of operational, financial, and legal risks
- Compliance Requirements: References to relevant Dutch and EU procurement regulations
- Dispute Resolution: Dutch jurisdiction choice and conflict resolution procedures
What's the difference between a Concession Agreement and an Asset Purchase Agreement?
Concession Agreements are often confused with Asset Purchase Agreements in Dutch business transactions, but they serve fundamentally different purposes. While both involve valuable assets, their core mechanisms and outcomes differ significantly.
- Ownership Transfer: A Asset Purchase Agreement permanently transfers ownership of assets, while a Concession Agreement only grants operational rights while the public entity maintains ownership
- Duration Structure: Concessions have fixed terms with possible extensions, typically 20-30 years. Asset purchases are permanent, one-time transfers
- Regulatory Framework: Concessions must comply with Dutch public procurement laws and EU regulations. Asset purchases follow private commercial law
- Operating Requirements: Concessions include detailed service levels and public interest obligations. Asset purchases generally don't impose ongoing operational requirements
- Risk Distribution: Concessions share risks between public and private parties, while asset purchases transfer all risks to the buyer
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