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A Concession Agreement gives a private company the right to operate public assets or provide services that would typically be managed by the government. In Hong Kong, these agreements are common for major infrastructure projects like tunnels, railways, and ports, where private firms invest capital and expertise in exchange for long-term operating rights.

These contracts carefully balance public interest with commercial viability, spelling out key terms like operation periods, revenue sharing, and service standards. Under Hong Kong law, concessions must align with public policy objectives while offering fair returns to investors. The MTR Corporation's operation of Hong Kong's rail system is a prime example of this partnership model.

Consider using a Concession Agreement when your organization wants to develop or operate major public infrastructure in Hong Kong without full government funding. These agreements work particularly well for large-scale projects like toll roads, power plants, or waste management facilities where private expertise can improve public services.

The timing is right for a Concession Agreement when you need to establish clear terms for revenue sharing, performance standards, and risk allocation between public and private partners. It's essential when seeking government approval for long-term infrastructure operations, especially under Hong Kong's Public-Private Partnership framework and Build-Operate-Transfer arrangements.

• Basic Infrastructure Concessions: Used for roads, bridges, and tunnels, focusing on construction, maintenance, and toll collection rights over 20-30 years
• Public Utility Concessions: Common for power plants and water treatment facilities, with detailed service quality metrics and pricing controls
• Transport Operations Concessions: Tailored for railway lines and bus terminals, emphasizing passenger service standards and safety requirements
• Commercial Development Concessions: Applied to government land or buildings, allowing private development while maintaining public interest controls
• Mixed-Use Concessions: Combines multiple elements, often seen in complex projects like railway property developments in Hong Kong

• Government Authorities: Hong Kong's relevant bureaus and departments grant concession rights and oversee compliance with public interest requirements
• Private Companies: Infrastructure developers, operators, and investors who secure rights to build and manage public facilities
• Legal Teams: In-house counsel and external law firms draft and negotiate Concession Agreement terms, ensuring regulatory compliance
• Financial Institutions: Banks and investors who provide project financing and monitor financial covenants
• Technical Consultants: Engineers and industry experts who advise on operational standards and performance metrics

• Project Scope: Define the infrastructure or service clearly, including technical specifications and operational requirements
• Financial Model: Prepare detailed revenue projections, cost estimates, and proposed fee structures
• Regulatory Review: Check current Hong Kong regulations and obtain necessary government approvals for the proposed operation
• Performance Standards: Establish measurable service levels, maintenance requirements, and quality benchmarks
• Risk Assessment: Map out potential operational, financial, and legal risks for appropriate allocation between parties
• Term Structure: Determine concession duration, extension options, and termination conditions

• Parties and Scope: Clear identification of government authority and concessionaire, with detailed project specifications
• Grant of Rights: Explicit terms of the concession, including duration, exclusivity, and permitted activities
• Financial Terms: Revenue sharing arrangements, pricing mechanisms, and payment obligations
• Performance Standards: Specific service levels, maintenance requirements, and quality benchmarks
• Risk Allocation: Clear distribution of operational, financial, and force majeure risks
• Termination Rights: Events triggering early termination and asset handover procedures
• Dispute Resolution: Hong Kong arbitration provisions and governing law clauses

A Concession Agreement differs significantly from an Asset Purchase Agreement in both purpose and structure. While both involve large-scale transactions, they serve distinct functions in Hong Kong's commercial landscape.

• Ownership Structure: Concession Agreements grant temporary operating rights while keeping ownership public; Asset Purchase Agreements transfer full ownership permanently
• Duration and Terms: Concessions typically run for 20-30 years with renewal options; Asset Purchases complete the transaction at closing
• Government Involvement: Concessions require ongoing government oversight and performance monitoring; Asset Purchases usually involve minimal government intervention after completion
• Revenue Model: Concessions involve continuous revenue sharing and operational obligations; Asset Purchases feature one-time payment and transfer of control
• Risk Allocation: Concessions distribute operational risks between parties; Asset Purchases transfer all risks to the buyer after closing