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Rebidding for Concessions

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  • Michael Klein
Abstract
Privatization of infrastructure ventures in sectors such as energy, telecommunication, transport, and water has become popular over the last decade. Often- for good or bad reasons - private firms are given monopoly franchises under some type of long-term concession agreement, for example"Build-Operate-Transfer"schemes. The article surveys the issues arising in designing specifications as well as incentive and risk-sharing parameters comprehensively and consistently both to achieve efficient performance by the concessionaire and to minimize post-award renegotiations. Concession award should as a rule be made competitively, unless special requirements of speed, innovation, or excessive transaction cost argue otherwise. Typically, competitive concession award is made by first price sealed bids. There are strong arguments, however, to consider open auctions more seriously in a number of cases. Auctions may also be re-awarded by way of auction. However, somewhat arbitrary bid preferences may have to be set. Auctioneers for complex concession contracts should operate at arms-length from all interested parties, including politicians. It may be sensible to let independent agencies that regulate the concession scheme run the auction.
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Suggested Citation

  • Michael Klein, 1998. "Rebidding for Concessions," World Bank Publications - Reports 11524, The World Bank Group.
    • Handle: RePEc:wbk:wboper:11524
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    References listed on IDEAS

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    Cited by:

    1. Mario, Cuevas, 2007. "A Practical Guide to the Assessment of the Vulnerability of the Non-Financial Private Sector," MPRA Paper 1375, University Library of Munich, Germany.
    2. Eshien Chong & Freddy Huet, 2010. "Partenariats public-privé et investissements de fin de contrat : le cas de l'industrie de l'eau en France," Recherches économiques de Louvain, De Boeck Université, vol. 76(4), pages 413-448.
    3. Cabrera, María & Suárez-Alemán, Ancor & Trujillo, Lourdes, 2015. "Public-private partnerships in Spanish Ports: Current status and future prospects," Utilities Policy, Elsevier, vol. 32(C), pages 1-11.
    4. Asheem Shrestha & Jolanta Tamošaitienė & Igor Martek & M Reza Hosseini & David J Edwards, 2019. "A Principal-Agent Theory Perspective on PPP Risk Allocation," Sustainability, MDPI, vol. 11(22), pages 1-18, November.
    5. S. Thomas Ng & Yoki Wong, 2007. "Payment and audit mechanisms for non private-funded PPP-based infrastructure maintenance projects," Construction Management and Economics, Taylor & Francis Journals, vol. 25(9), pages 915-923.
    6. Christopher Costello & Nicolas Querou & Agnès Tomini, 2014. "Spatial concessions with limited tenure," Post-Print hal-01123392, HAL.
    7. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications - Books, The World Bank Group, number 15024.
    8. Estache, Antonio & Iimi, Atsushi, 2009. "Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement," Policy Research Working Paper Series 4853, The World Bank.
    9. Hasret Balcioglu, 2017. "Role Of Public Private Partnership (Ppp) Model In Energy Investments," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(1), pages 1-38, January.
    10. Kenneth Button, 2016. "Public--private partnerships: a review of economic considerations with particular reference to transportation projects," Transportation Planning and Technology, Taylor & Francis Journals, vol. 39(2), pages 136-161, March.
    11. Uður Emek, 2002. "The Role of Auction Design in Awarding Spectrum," Game Theory and Information 0209001, University Library of Munich, Germany.
    12. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stephane, 2003. "Renegotiation of concession contracts in Latin America," Policy Research Working Paper Series 3011, The World Bank.
    13. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2008. "Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 421-442, March.
    14. Urs Meister, 2004. "Franchise Bidding in the Water Industry- Auction Schemes and Investment Incentives," Working Papers 0033, University of Zurich, Institute for Strategy and Business Economics (ISU).
    15. World Bank, 2003. "Unsolicited Proposals : The Issues for Private Infrastructure Projects," World Bank Publications - Reports 11305, The World Bank Group.
    16. World Bank, 2006. "Approaches to Private Participation in Water Services : A Toolkit," World Bank Publications - Books, The World Bank Group, number 6982.
    17. Eshien Chong & Freddy Huet & Stéphane Saussier, 2006. "Auctions, Ex Post Competition And Prices: The Efficiency Of Public‐Private Partnerships," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(4), pages 521-554, December.
    18. Pasquale L. Scandizzo & Marco Ventura, 2008. "A model of public and private partnership through concession contracts," ISAE Working Papers 104, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    19. Williams, Nathaniel J. & Jaramillo, Paulina & Taneja, Jay & Ustun, Taha Selim, 2015. "Enabling private sector investment in microgrid-based rural electrification in developing countries: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1268-1281.
    20. Jorge Montesinos & Eduardo Saavedra, 2012. "Algunos Alcances en torno a la Institucionalidad y Renegociación de Concesiones en la Infraestructura de Transporte de Uso Público en Perú," ILADES-UAH Working Papers inv277, Universidad Alberto Hurtado/School of Economics and Business.
    21. Marques, Rui Cunha & Berg, Sanford V, 2010. "Revisiting the strengths and limitations of regulatory contracts in infrastructure industries," MPRA Paper 32890, University Library of Munich, Germany.
    22. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 1999. "The Chilean Infrastructure Concessions Program: Evaluation, Lessons and Prospects for the Future," Documentos de Trabajo 60, Centro de Economía Aplicada, Universidad de Chile.

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