Rules for private companies to build and run public works

Automatic summary, not yet reviewed

1. The law creates a standard public works concession contract: a company builds and operates a work (or only operates it) for a set period, at its own risk, and is paid through what it charges for its use or through a price paid by the Administration.
2. The contract must include operation, maintenance and modernization of the work throughout the concession, and may cover accessory works linked to the main one.
3. Concessions may include complementary commercial areas, such as restaurants, gas stations or parking lots, whose income goes to the concessionaire and whose assets revert to the Administration when the concession ends.
4. Before bidding, a feasibility study is required and made public; private parties may propose concessions by submitting such a study, and if they are not awarded the contract they recover their expenses plus 10 %.
5. Tariffs are set by the contracting authority as maximums, and the contract must keep its economic balance: if it is upset for the reasons the law lists, the Administration restores it by changing tariffs or the concession period.
6. The concessionaire can raise money by issuing bonds and other securities, mortgaging the concession or using participating loans, always with authorization or notice to the Administration.
7. Maximum terms are 40 years for building and operating, and 20 for operating only, with exceptional extensions up to 60 and 25 years. The concession ends when the term runs out or through termination, and the work reverts to the Administration.
8. Most of the law is state basic legislation, binding on all public administrations; it takes effect three months after publication in the official state gazette (BOE).

Who it affects

• Public administrations that want to build works through concessions: They must follow the procedure, deadlines and limits of this law.
• Construction and concession companies: They bear the risk of building and operating the work, with specific rights and duties.
• Users of public works: They pay maximum tariffs set by the Administration, with review provided for in the contract.
• Banks and investors financing concessions: They have guarantees such as the mortgage on the concession and the securitization of collection rights.

Words worth knowing

Concesión (concession)

A contract under which the Administration entrusts a company, for a set period, with building and operating a work at its own risk, charging users.

Equilibrio económico del contrato (economic balance of the contract)

The concessionaire keeping the expected profits and costs from when the contract was signed; if something upsets them, the contract must be adjusted.

Canon

A periodic payment made for using something, here for using the public work.

Titulización (securitization)

Turning future collection rights into securities that can be sold to investors to get money now.

Reversión (reversion)

When the concession ends, the work and its assets become the property of the Administration.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries