Draft Federal Law No.449127-6 “On amending Federal Law ‘On concession agreements’ and certain legislative acts of the Russian Federation” aimed at extension of the possibilities for attracting private investments into concession projects, is under consideration of the State Duma.

The most important innovation is a proposal to open the list of facilities in respect of which a concession agreement may be concluded. Current revision of the Federal Law “On concession agreements” provides a limited list of such facilities, which in particular include motorways, health care, culture, sport and other facilities.

The amendments also enable any interested person to take the initiative in concluding a concession agreement to by sending to the concession grantor a proposal for conclusion of the concession agreement with the draft of the concession agreement attached.

In the event that the decision to enter into a concession agreement is taken, the concession grantor posts a proposal for the conclusion of the concession agreement, and a draft of the agreement itself, on the website http://torgi.gov.ru/ for receiving competing applications for participation.

If no application for participation in the agreement comes within 30 days, the concession agreement will be entered into with the person who initiated the conclusion of the agreement upon the conditions provided in the proposal for conclusion of the concession agreement.

The bill also provides the following significant changes:

• A concessionaire who performed all the obligations under the concession agreement in good faith is given the priority right to buy out the object of the concession agreement if it is put up for sale by the concession grantor after the expiry date of the agreement.

• Payment to the concession grantor may be made in respect of any object of the concession agreement if the payment was determined by the tender criteria (current edition of the Federal Law “On concession agreements” provides effecting of payment by the concessionaire only in the event that the object of the concession agreement is a motorway or sections of motorways).

• If at the time that the concession agreement is entered into, a construction or reconstruction of a linear facility is planned, parts of which are property of different constituent entities of the Russian Federation, such constituent entities are entitled to make an agreement on holding a joint tender.

• In the event that the performance of the concession agreement is impossible within the timeframes provided therein, the concessionaire is entitled to address the concession grantor with a request to change the basic conditions of the concession agreement determined by the resolution on conclusion of the concession agreement. A resolution on alteration of the basic conditions of the concession agreement is taken by the concession grantor, on the grounds of a resolution of the Government of the Russian Federation (for federal projects), executive authority of the constituent entity of the Russian Federation (for regional projects), or municipal administration (for municipal projects).

• The object of the concession agreement can be property owned on the basis of the right of economic management, or operational management by a state or by a municipal unitary enterprise, or a budgetary or autonomous institution.

Introduction of the abovementioned changes in the Federal Law “On concession agreements” will assist in the enhancement of stability and increase the share of private investments into state property.

The amendments are planned to be introduced from April 1, 2014.

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Pavel Karpunin or Rimma Leshcheva, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.