Proper structure to the offering of a concession is a big contributor to delivering a balanced arrangement – fair to the investor, to the agency charged with offering the concession and ultimately delivering benefits along the supply chain right through to the man in the street.
There is usually a considerable body of work involved in getting this right, structure takes time to assemble properly and for many parties a sensible step is to enlist
outside support in the form of specialist consultants active in the sector.
Essentially no two concession opportunities are the same, they all have bespoke elements to a greater or lesser extent, but while there is no 100 per cent template assembling a robust concession process can benefit immensely from drawing on hard-earnt experience.
This option should be taken seriously from Day One – it is of immense benefit, for example, to know where all the potential landmines are.
There is also a very objective element to being able to draw on such a resource – it helps promote decisions being made rationally without fault or favour.
A good example of the chaos that can prevail – frustrated investors, sub-standard operations, higher costs and loss of business – is the current situation in Douala,
Cameroon where a poor concession renewal process has resulted in conflict to the detriment of the operation overall.
In terms of the human factor introducing negativity into concession arrangements there is arguably no better example than that of the dispute between President Ismail Omar Guelleh (IOG) of Djibouti and the Franco-Djiboutian businessman Abdourahman Mahamoud Boreh which manifested itself in Djibouti initiating legal action against Boreh, accusing him of misappropriating funds in his role of Chairman of the Djibouti Ports & Free Zones Authority, when the Doraleh Container Terminal (DCT) concession was awarded to DP World in 2013.
Now, after the illegal expulsion of DP World from DCT, a decision by the London Court of International Arbitration which saw Djibouti ordered to pay USD385 million to DPW in compensation plus other factors lining up in its favour there are signs of both a rapprochement between IOG and Boreh – they are talking – and between Djibouti and DPW.
Time and time again experience tells us that there is no substitute for constructive discussion to resolve differences over concession agreements – the legal path is, realistically, the course of very last resort!