Typical Duties and Obligations in a PPP

Duties and Obligations of the Concession Company

Concession companies are generally responsible for the following:

Design
  • Complete the full detailed design of all new build elements;
  • Carry out necessary structures assessments at various stages throughout the concession period.
Build
  • Construct all the new works;
  • Assume responsibility for ground conditions, archaeological monitoring and resolution, utility relocations and, landscaping.
Maintain
  • Maintain the road pavement, structures, landscaping, signs, lining, lighting, safety barriers, fencing and all other aspects of the road;
  • Carry out comprehensive winter maintenance including patrols, precautionary salting, and snow clearance.
Operate
  • Manage the road in terms of safety, traffic management, information to the road user, oil spillage, accidents;
  • Operate the tolling system to the required levels of service and upgrade it as necessary to match demand;
Re-Invest
  • Prior to handback to the public sector at the end of the concession, upgrade all the facilities as necessary (e.g. road re-surfacing, re-lining) in order to provide the required residual life for the road.
  • In regard to the road structure, the concessionaire is to hand it back with a further 10 year life before any structural strengthening would be required.
Finance
  • Raise finances for the scheme and take the responsibility for all the repayments;
  • Carry the risk of cost over-runs.

Period of Concession

PPP contracts in Ireland generally last between 25 and 30 years.

Financials of PPP Projects

In a PPP contract, TII generally provides fixed payments of a significant monetary amount to the concessionaire over the period of construction, which are released upon satisfactory completion of key construction elements and during the period of operation.

The concessionaire generally pays a share to TII of the toll revenues collected, dependent on the level of traffic on the road. 

This revenue share tends to be a substantial amount of money that will part repay the subvention payments that were paid by TII, as described above.

Payments from the Concessionaire to the State

In addition to the revenue share that it will pay to TII, the concessionaire will be obliged to make the following payments:

  • Commercial rates: In accordance with the Valuation Act 2001, the concessionaire will be the occupier of a rateable property due to its operation of the toll facilities. the concessionaire will be required, dependent on the traffic volumes and calculated in accordance with a methodology set out by the Valuation Office, to pay rates to the three local authorities through whose administrative area the road passes.
  • Corporation Tax
  • VAT on non-recoverable receipts