Concession Agreement in Rwanda: What You Need to Know

The concession agreement in Rwanda is an essential legal document that allows private entities to invest in public infrastructure and projects such as energy plants, airports, highways, and railways. This agreement has been instrumental in promoting economic growth and development in the country, as it provides a legal framework for public-private partnerships (PPP).

Before delving into the intricacies of the concession agreement, let`s define what it is. A concession agreement is a type of contract where a government entity, known as the grantor, grants a private entity, referred to as the concessionaire, the right to operate, maintain and invest in public infrastructure or projects for a set period. In exchange, the concessionaire pays the grantor a fee, which can be in the form of a lump sum or a share of the revenue generated.

In Rwanda, the concession agreement is governed by the Law Relating to Public-Private Partnership No. 12/2015, which was enacted to promote the development of PPPs in the country. This law outlines the procedures for the grant of concessions, the rights and obligations of the parties involved, and the dispute resolution mechanism.

The concession agreement serves several purposes, such as:

1. Efficient use of resources: Private entities have the technical expertise and financial resources to develop and operate infrastructure and projects efficiently. The concession agreement allows the government to leverage these resources to improve public services.

2. Risk allocation: The concession agreement outlines the roles and responsibilities of the parties involved in the project, including the allocation of risks. The private entity assumes most of the risks, such as construction delays, cost overruns, and demand risk.

3. Quality of service: The concessionaire is contractually obliged to provide a certain level of service quality to the public, ensuring that public services are improved.

4. Revenue generation: The government earns revenue from the concession fee paid by the concessionaire, which can be used to fund other public projects.

However, the concession agreement is not without its challenges. Some of the challenges include:

1. Political risk: The concessionaire is exposed to political risks such as changes in government policies, regulations, and laws that could affect their operations.

2. Lengthy negotiation processes: The negotiation process for the concession agreement can be lengthy, leading to project delays.

3. Unforeseen circumstances: Unforeseen circumstances like natural disasters, epidemics, and economic crises can affect the project`s viability.

4. Potential for abuse: There is a risk of abuse of the concession agreement by the private entity, such as overcharging for services and not meeting their contractual obligations.

In conclusion, the concession agreement in Rwanda is a critical legal tool that has facilitated the development of public infrastructure and projects, attracting private investment and promoting economic growth. The government and private entities must ensure that they negotiate fair and transparent agreements that balance the interests of both parties. The success of PPPs in Rwanda will depend on the ability to manage risks and challenges and create a conducive environment for business development.