DUSHANBE, November 30, 2011, Asia-Plus -- Deputies of the lower house (Majlisi Namoyandagon) of the parliament have endorsed a draft law on concessions, authored by members of the Majlisi Milli (Tajikistan’s upper chamber of parliament) Matloubkhon Davlatov and Ghaybullo Afzalov.

A regular sitting of the third session of the Majlisi Namoyandagon of the fourth convocation, presided over by its head, Shukurjon Zuhurov, was held on November 30.

Presenting the bill, the Majlisi Namoyandagon deputy Safarali Gulov noted that the concessions law was aimed at promoting an efficient use of state-owned property, creation of new jobs and increase of the revenue part of the national budget.

“Under the new concessions law that will replace the law on concessions adopted as early as 1997, natural resources, air space, water reserves, mineral resources of Tajikistan may be given for use on a concession basis to domestic and foreign physical and legal entities, except of organs of government,” MP Gulov said.

He added that to-date, Tajikistan has signed only two concession agreements – for operation of the Dushanbe-Khujand-Chanak highway and for repairing and maintenance of the electrical infrastructure and expansion of hydroelectric capacity of Gorno Badakhshan.

A concession is a business operated under a contract or license associated with a degree of exclusivity in business within a certain geographical area. For example, sports arenas or public parks may have concession stands.  Similarly, public services may be operated as concessions.

The owner of the concession — the concessionaire — pays either a fixed sum or a percentage of revenue to the entity with the ability to assign exclusive rights for an area or facility.  A concession may involve the transfer to the concessionaire of the right to use some existing infrastructure required to carry out a business (such as a water supply system in a city); in some cases, such as mining, it may involve merely the transfer of exclusive or non-exclusive easements.

In the case of a public service concession, a private company enters into an agreement with the government to have the exclusive right to operate, maintain and carry out investment in a public utility (such as a water supply system) for a given number of years. Other forms of contracts between public and private entities, namely lease contract and management contract (in the water sector often called by the French term affermage), are closely related but differ from a concession in the rights of the operator and its remuneration.  A lease gives a company the right to operate and maintain a public utility, but investment remains the responsibility of the public.  Under a management contract the operator will collect the revenue only on behalf of the government and will in turn be paid an agreed fee.