Concession agreements: amendments to the legislation

29.05.2013

Legal Update No. 420, 29 May 2013

Federal Law of 7 May 2013 No. 103-FZ introduces amendments into the Federal Law “On Concession Agreements” and other regulatory and legal acts relating to the specifics of concluding, amending and implementing concession agreements in relation to heat supply, water supply and sewerage facilities.

In particular, if a facility constituting the subject of a concession agreement consists of heat supply facilities, centralised hot water and cold water supply and sewerage systems, or individual facilities of such systems, the concession agreements should contain additional material terms, including:

  • the long-term parameters of regulation of the activities of the concessionaire: tariffs determined in accordance with the regulatory and legal acts in the sphere of water supply and sewerage, the prices (tariffs) in the sphere of heat supply determined in accordance with the regulatory and legal acts in the sphere of heat supply;
  • the maximum costs that the concessionaire intends to incur in creating or renovating the subject of the agreement throughout its term;
  • the planned reliability, quality and energy efficiency indicators of the facilities;
  • the procedure for reimbursing the concessionaire’s costs that are subject to reimbursement in accordance with the regulatory and legal acts in the sphere of heat and water supply and sewerage and have not be reimbursed on expiry of the term of the concession agreement.

In addition, the results of control exercised over observance by the concessionaire of the conditions of the agreement will the drawn up in a control results statement, which, in turn, should be posted by the concession provider on the official website.

The Law also amends the Federal Laws “On Heat Supply” and the Federal Law “On Water Supply and Sewerage” for the purpose of establishing mechanisms for transferring rights of possession and (or) use of heat, energy and water supply and waste water purification facilities. Two mechanisms are envisaged for transferring the given rights to such facilities: through conclusion of a lease or a concession agreement. Tender procedures, rights and obligations under a lease and the mechanism for cancelling it are all regulated.

The Federal Law comes into effect on 1 January 2014, apart from certain provisions relating to amendments to the Federal Law “On Heat Supply” and the Federal Law “On Water Supply and Sewerage”, which come into effect on 8 May 2013.

If you have any question or would like more detailed information, please contact: Vitaly Mozharowski, Partner, Real Estate & Construction, Goltsblat BLP, by phone +7 495 287 44 44, or by e-mail Vitaly.Mozharowski@gblplaw.com; or Yuri Chernobrivtsev, Partner, Real Estate & Construction, Goltsblat BLP, by phone +7 495 287 44 44, or by e-mail Yuri.Chernobrivtsev@gblplaw.com; or Tatyana Bounyakina, Senior Associate,Real Estate & Construction, Goltsblat BLP, by phone +7 495 287 44 44, or by e-mail Tatyana.Bounyakina@gblplaw.com.

Contact details

For all issues related to publications, news and press releases, please contact:

Ksenia Soboleva

Head of PR and Communications

Subscription

If you would like to receive our legal alerts and updates highlighting current legal issues relevant to your areas of interest and providing expert commentary by our lawyers, please click on "Sign Up" and fill out the form.