This guide has previously focused on the relationships between the concessionaire and the government, and between the concessionaire and the lenders. We now turn to address the issue of how the concessionaire actually upholds its obligations and delivers the services that have been agreed.

The concessionaire itself usually has a minimal number of staff. It does not have construction personnel to build the facility and it does not usually have any facilities management staff to operate and maintain the facility. Therefore, the concessionaire acts as the “middle man”, the interface between the public sector (as recipient of the facilities and/or services) and an EPC contractor and an O&M contractor (as suppliers of the facilities and/or /services). This can be seen in the diagram below.

The split between EPC contractor and O&M contractor arises because construction works and maintenance activities are traditionally the domain of different types of businesses. However, due to diversification or consolidation within the market, the EPC contractor and the O&M contractor may sometimes be part of the same corporate group, or they may even be the same corporate entity.

Given its limited financial resources, the concessionaire must ensure that its inputs and outputs on the one hand upstream to the government under the concession agreement and on the other hand downstream to the sub-contractors under the sub-contracts are as closely matched as possible – ideally the concessionaire needs to be in a neutral position.