Concessions
What is a concession?
Due to the need to increase and improve infrastructure and other services for citizens, the government offers construction and operations concessions (or tenders) as a long-term instrument of collaboration with the private sector, given its experience and management skills in the development of certain projects. Thus, the "concession” can be understood as the adjudication of a tender awarded to a provider on behalf of the government to finance, build, renovate, manage or maintain an infrastructural project or render a service, during a certain period of time, in return for a collection, either directly from the government or from the end user of the infrastructure.
The use of this formula allows the government to defer the initial investment for the life of the infrastructure project, bringing it budgetary security as it transfers most of the risks to the private sector – among them, the fixed price and the duration of the construction time. This way, the private sector makes progress in the commissioning of the infrastructure and maintains and runs its operations to the highest quality standards to be able to recover its investment in the shortest time period possible.
Due to this and the aim of promoting private investment, the government entrusts the private sector with the execution (construction, improvement and/or renovation) of public works and the operations of certain infrastructure for a certain period of time. By allocating the concession for infrastructure to the private sector, it is possible to avoid some of the problems that used to obstruct the accomplishment of certain projects, such as the insufficient allocation of resources, or excessive dependence on the budget, etc.
The investments in public infrastructure such as roads, railway transport and social services infrastructure (hospitals, schools, universities, etc.) are of vital importance for the development of a country, so the concession model has to be seen as an efficient instrument that leads to private investment in these projects under the criteria of value for money and appropriate use of public resources.
The main objective of a concession is to promote the participation of private investment in the financing and development of infrastructure (projects with attractive profitability for the investors), to guarantee the long-term preservation of infrastructure and to provide standards of service that users and government are prepared to pay for. Thus it is possible to provide quality services that guarantee effective management for users, such as the concession of motorways, infrastructure for the transport of passengers or merchandise and social infrastructure.
As basic features of a concession, the following stand out:
- The Administration and private companies share the same objective: the success of projects.
- Reversion of the administration's assets when the term of the concession is completed.
- The concession companies are responsible for design, construction, financing, operations and maintenance.
- Market conditions are reached in public projects.
- Capacity to use varied systems and finance sources.
- The cost of construction and operations is often financed by the private company.
- Most of the risks are transferred to the private company and it has the right to receive income, such as toll collection, payments on behalf of the Administration, etc., for a term that is subject to prior agreement.
ACCIONA Hospital Services
Within ACCIONA Concesiones, ACCIONA Hospital Services focuses on hospital concessions – an operations model that is being implemented in the healthcare sector. The division aims to lead nationally and internationally the promotion, construction and management of healthcare infrastructure and the provision of healthcare services. In recent years it has participated in the construction of hospitals including the following: Río Hortega Hospital, Valladolid; San Pedro Hospital, Logroño; Segovia Hospital; Alicante; Infanta Sofía Hospital, Madrid; Hospital del Bajío (Mexico).