NAMIBIA CONCESSION MODEL

INTRODUCTION

• CONCESSION MEANS THE RIGHTS, WHETHER FULL OR RESTRICTED, SHARED OR EXCLUSIVE TO

CONDUCT TOURISM ACTIVITIES.

• CONCESSION ON STATE LAND HAVE SIGNIFICANT ROLE TO PLAY IN NAMIBIA AND

COMPLEMENT OTHER CONTRIBUTORS TO THE ECONOMY OF THE COUNTRY.

• CONCESSION ALSO CREATE OPPORTUNITIES FOR BUSINESS DEVELOPMENT AND THE

ECONOMIC EMPOWERMENT OF FORMERLY DISADVANTAGES NAMIBIA THROUGH ACCESS TO

TOURISM, HUNTING AND INDUSTRIES BASED ON WILDLIFE PLANT AND ANIMAL RESOURCES.

BOT (BUILD OPERATE TRANSFER) VS MOT (MANAGE OPERATE TRANSFER)

STATE LESSOR/CONCESSOR(MET)

CONSERVANCYCONCESSIONAIRE

(COMMUNITY)

OPERATOR

OPERATING COMPANY

STATE LESSOR/CONCESSOR(MET)

CONSERVANCYCONCESSIONAIRE

(COMMUNITY)

PROJECT COMPANY (COMMUNITY)

MANAGEMENT COMPANY (C0NTRACT)

THE STATE

• THE STATE AWARDS THE HEAD CONCESSION CONTRACT TO THE CONSERVANCY.

• THE STATE GIVES TOURISM RIGHTS TO BUILD A LODGE OR A TRAVERSING RIGHT TO DO GAME DRIVES TO THE CONSERVANCY INSIDE

PROTECTED AREAS.

• THE STATE USES TEMPLATE CONTRACTS AND STANDARDIZED PROCEDURE TO ABIDE THE CONSERVANCY TO THE TERMS AND

CONDITION AS REQUIRED BY THE CONCESSOR (MET).

• AFTER THE SIGNING OF THE CONTRACT, THE CONSERVANCY/THE HEAD CONCESSION CONTRACT HOLDER THAN ASSUME THE RIGHTS

AND DUTIES.

• MET HELPS THE CONSERVANCY IN SEEKING FOR A JOINT VENTURE PARTNER (OPERATOR).

• ONCE THE OPERATOR IS APPOINTED, HE TAKES OVER THE ONGOING OVERSIGHT AND REGULATORY FUNCTIONS.

• THE OPERATOR TAKES FULL RESPONSIBILITY AFTER THE SIGNING OF THE OPERATORS CONCESSION CONTACT.

CONSERVANCY

• (CONSERVANCY OR OTHER REPRESENTATIVE LEGAL BODY): RECEIVES HEAD‐CONCESSION-

CONTRACT FROM STATE.

• ASSUMES RIGHTS & DUTIES OF HEAD-CONCESSION-CONTRACT

• THE CONSERVANCY SUBLEASES THEIR RIGHTS IN THE HEAD-CONCESSIONS-CONTRACT TO

PROJECT/OPERATING COMPANY USING STANDARDIZED DOCUMENTS & PROCEDURES

• THE OPERATING COMPANY ASSUMES RIGHTS & DUTIES OF SUBLEASE/--‐CONCESSION

• RECEIVES INCOME BASED ON FIXED AND VARIABLE FEES

• PAYS A FEE OR % OF INCOME TO STATE AND USES OR DISTRIBUTES BALANCE

PROJECT COMPANY (INVESTOR)

• RECEIVES OPERATORS CONCESSION CONTRACT FROM THE CONSERVANCY

• ASSUMES RIGHTS AND DUTIES OF THE OPERATOR.

• CARRIES CAPITAL AND OPERATING RISK

• PAYS ‘RESOURCE FEE’ WITH FIXED AND VARIABLE ELEMENTS

• ALSO FINANCES, DESIGNS, BUILDS, OPERATES, MAINTAINS REFURBISHES, MARKETS, TRANSFERS

BACK…

• …AND ENSURES BROAD--‐BASED COMMUNITY EMPOWERMENT

• VARIATION IN COMMUNITY PARTICIPATION AT PROJECT COMPANY LEVELS

THE TWO MODELS USED IN NAMIBIA

(BOT)-BUILD-OPERATE-TRANSFER

BASIC STRUCTURE WITH NO CONSERVANCY SHARE IN THE

PROJECT COMPONY

THIS IS A CONTRACT WITH FULL MAINTENANCE OBLIGATION

THE PROJECT COMPANY OWN BY PRIVATE PARTNER WITH PDN-

(PRIVIOUSLY DISADVANTAGE NAMIBIAN) SHAREHOLDING….

PROCURED THROUGH TENDER PROCESS.

SUBJECTED TO EMPOWERMENT OBLIGATIONS AND INCLUDING,

PREFERENTIAL EMPLOYMENT, TRAINING, LOCAL CONTRACTING

AND SOCIAL INVESTMENT

THE COMPANY CARRIES ALL RISK IN MAKING THINGS

WORK….

FULL OWNERSHIP WITH 3RD PARTY MANAGEMENT

BASIC STRUCTURE PLUS CONSERVANCY OWNERSHIP OF

PROJECT COMPANY.

PROJECT COMPANY FINANCE AND RETAINS BOT

RESPONSIBILITY….BUT APPOINTS EXTERNAL MANAGER ON

MANAGEMENT CONTRACT.

PROJECT COMPANY OWNED BY THE

COMMUNITY/CONSERVANCY….THEY BUILD OPERATE AND

TRANSFER TO THE MANAGEMENT CONTRACT.

MANAGEMENT COMPANY WILL DO THE OPERATIONS &

MARKETING

THE MAIN DIFFERENCE IN THIS MODEL IS THE CONSERVANCY

CARRIES THE WHOLE RISK

ADVANTAGES AND DISADVANTAGES

BOT Advantages Disadvantages

□ Clear definition of roles □ Perceived low levels of empowerment

□ Simple structure □ Perceived 'passive role' for conservancy

□ Conservancy 'head rights' secure □ Capital returns accrue to private investor

□ 'Resource-use' fee secure □ Operating returns accrue to private partner

□ Distributes risks/roles to appropriate parties? □ Overall, low-risk but low-return model

Some Implications

MOT Advantages Disadvantages

□ Clear definition of roles □ Levels of empowerment still perceived to be low

□ Simple structure □ Perceived 'passive role' for conservancy

□ Conservancy 'head rights' secure □ Operating returns accrue to private partner

□ 'Resource-use' fee secure □ Capital risk with conservancy (or shared with private partner

according to % inputs)

□ Capital returns accrue to community (or shared with private

partner according to % inputs)

□ Conservancy requires access to large capital sum

Some Implications

SOME IMPLICATIONS ON THE BOT (BUILD OPERATE TRANSFER) MODEL

Project financing - Requires no community capital because project is entirely financed by private

partner

Conflict resolution - Contractually governed (Joint Management Committee followed by mediation

and arbitration)

Exit strategies - Contractually governed (termination after exhaustion of required procedures)

Support requirements- Low compared to other options; but still requires support (compliance and

enforcement)

•Exit strategies - Contractually governed (termination after exhaustion of required procedures)

•Support requirements- Low compared to other options; but still requires support (compliance and enforcement)

•Examples - Twyfelfontein & Namushasha Country Lodges (Nam); Pafuri Camp (RSA) etc. - most common approach

SOME IMPLICATIONS ON THE MOT MODEL

Project financing - Requires community capital; fixed assets (or portion of) financed by conservancy; moveable assets & operating capital by private partner

Conflict resolution - Contractually governed (Joint Management Committee followed by mediation and

arbitration)

Exit strategies - Contractually governed (termination after exhaustion of required procedures)

THE END

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