Commission for concessions of the Republic of Srpska -

08.04.2008.

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Laws

LAW ON CONCESSIONS

I GENERAL PROVISIONS



Article 1

This Law regulates the subject, the modalities and the conditions concerning the granting of Concessions in the Republic of Srpska, the competence for granting of Concessions, the establishment of the Republic of Srpska Concession Commission, the tendering procedure, the contents of concession contract, the termination of concession contract, the obligations of the Concessionaire, the resolution of disputes and other issues of importance for granting of Concessions on the territory of the Republic of Srpska.

This Law sets the conditions under which local and foreign legal persons may be granted Concessions for providing infrastructure and services, as well as exploitation of natural resources, financing, design, construction, rehabilitation, maintenance and/or operation of such infrastructure and all accompanying facilities in sectors within the constitutional competence of the Republic of Srpska.

Article 2

For the purpose of this Law, the Concession means the right to perform economic activities using natural resources, public facilities and to perform the activities of general interest defined by this Law.

No concession regulated by another law can be granted, unless in accordance with this Law.

Article 3

Purpose of the Law

The purpose of this Law is to create a transparent, accessible to all, non-discriminatory and clear legal framework for setting the conditions under which local and foreign legal persons may be granted Concessions in the Republic of Srpska and to encourage the investment of foreign capital in sectors mentioned in Article 1, paragraph 2 of this Law.

Article 4

Subject to Concession

The subject to Concession pursuant to this Law shall be:

   1. Construction and operation or operation of:
          * roads and associated infrastructure facilities,

          * railways, navigable channels and ports, and

          * airports;
   2. Exploitation of watercourses and other waters;

   3. Construction of power plants;

   4. Construction and/or exploitation of water accumulations, excluding the transmission of electricity;

   5. Exploration and/or exploitation of energy and other mineral raw materials;

   6. Exploration and/or exploitation of crude oil and natural gas;

   7. Usage of construction soil;

   8. Exploitation of forests and forest areas;

   9. Hunting and fishing;

  10. Construction, exploitation and management of pipeline transport of oil and gas and storage in pipelines and terminals;

  11. Games of chance;

  12. Postal and telecommunication services, excluding common and international communications mentioned in Article III1 (x) of the Constitution of Bosnia and Herzegovina;

  13. Passenger and freight railway transportation;

  14. Public bus transportation of passengers;

  15. Usage of healing, thermal and mineral waters;

  16. Exploration and/or exploitation of nonmetallic mineral raw materials, including all secondary mineral raw materials defined by different law;

  17. Hydro-melioration systems and systems for extracting of materials from watercourses and water areas;

  18. Formation and/or usage of riverbeds and banks and lakes;

  19. Utilization of agricultural soil;

  20. Areas and buildings of natural and built heritage;

  21. Other goods within the meaning of Article 2 established in the Document on Concessions Policy referred to in Article 14 of this Law.

Article 5

Definitions


For the purpose of this Law, the following terms shall have the following meanings:

"Conceding Party" - all relevant ministries or authorities of the Republic of Srpska designated by the Government of the Republic of Srpska to grant a Concession.

"Concession" - the right granted by a Conceding Party to provide the construction of infrastructure and/or services and to exploit natural resources under terms and conditions agreed on by Conceding Party and Concessionaire.

"Concessionaire" - legal person founded pursuant to the laws of the Republic of Srpska, ownership of a local and/or foreign legal person who is granted a Concession and executing a concession contract pursuant to this Law.

Article 6

Authority to Grant a Concession and Conclude a Concession Contract

The decision to grant a Concession is made by the Government of the Republic of Srpska. Based thereon the Government or line Ministry and/or local authority and/or public enterprise, authorized by the Government, managing the subject to Concession shall conclude the Concession Contract.

II INSTITUTIONAL STRUCTURE

Article 7


Establishment and General Functions of the Commission

This Law establishes the Concession Commission of the Republic of Srpska (hereinafter referred to as the Commission) as a permanent, independent regulatory legal person set up to carry out the function of concessions granting, whose authority and obligations are defined by this Law.

In case the subject to Concession occupies the territory of the Republic of Srpska and of the Federation of Bosnia and Herzegovina, the authority lies with Joint Concession Commission established by the Law on Concessions of Bosnia and Herzegovina.

In executing its function, the Commission shall promote the satisfaction of public needs and the economic development through involvement of private sector in financing, design, construction, rehabilitation, maintenance and/or operation of infrastructure and accompanying facilities, services and in exploitation of natural resources and buildings used for their exploitation, taking into account the protection of economic and social interests, environmental protection as well as the fair treatment of private sector.

The head office of the Commission shall be in Banja Luka.

The Commission may hold its sessions also outside the head office.

The Commission seal shall read: "Komisija za koncesije Republike Srpske, Banja Luka" (the Concession Commission of the Republic of Srpska, Banja Luka).

Article 8

Composition of the Commission


The Concession Commission consists of five members, citizens of the Republic of Srpska and Bosnia and Herzegovina.

Article 9

Appointment and Eligibility of Commissioners


The Commissioners shall be appointed by the National Assembly of the Republic of Srpska (hereinafter referred to as the National Assembly) upon recommendation of the Republic Government of eminent experts in the field of law, economics and engineering.

The President and the Vice-President shall be appointed from among the Commissioners by the National Assembly.

The Commissioners may at the same time be appointed as members of Joint Concession Commission referred to in Article 7, paragraph 2 of this Law.

No person convicted of a criminal offence or under criminal proceedings can be appointed as a Commissioner.

The Commissioners may not be related or married to each other.

A Commissioner may not have direct or indirect interests in any activity that would lead to a conflict of personal interest with his/her official duties.

A Commissioner may not be engaged in another employment nor execute any other function, except scientific and lecturing activities.

A Commissioner may not be a member of any body of legislative, executive or judicial power.

A Commissioner may not execute any political function.

Article 10

Term of Office


The term of office of Commissioners is five years and it may be renewed for another term of five years.

The Commission may authorize a Commissioner to continue and complete the task assigned notwithstanding the expiry of his/her term.

If a vacancy in the Commission exists prior to the expiration of term, the National Assembly of the Republic of Srpska shall appoint a new Commissioner for the remainder of term.

Article 11

The President, the Vice-President and any Commissioner may be dismissed before the end of term at his/her own request.

The President, the Vice-President and any Commissioner may be dismissed before the end of term in case it is established that he/she does not observe the law.

Simultaneously with the dismissal referred to in paragraphs 1 and 2 of this Article, another person shall be appointed as the President, the Vice-President or any Commissioner in a way and according to the procedure set by this Law.

In cases mentioned in paragraphs 1 and 2 of this Article, another person shall be appointed for the period until the end of term of his/her predecessor.

Article 12

Appointment and Remuneration of Personnel

The Commission shall have a Secretary.

The Secretary of the Commission and other personnel working for the Commission shall be appointed in a way and under conditions set by law and Rules of Procedure of the Commission. The Rules of Procedure of the Commission shall set the criteria for the level of remuneration.

The Government of the Republic of Srpska shall set the level of salary and other remunerations to the President, the Vice-President and other Commissioners.

Article 13

Jurisdiction of the Commission


It is within the exclusive jurisdiction of the Commission to:

    * monitor the entirety of activities of Concessionaire in order to ensure that the consumers are adequately provided with services and charged fair and reasonable rates;

    * approve the terms and conditions of a standard services contract;

    * examine the complaints filed by consumers concerning the amount of remuneration or conditions for supply of services by the Concessionaire; and

    * decide on any claim filed or request for revision filed pursuant to this Law.

Article 14

Other Duties and Functions of the Commission


The Commission shall prepare a Paper on the Policy of Granting of Concessions (hereinafter referred to as the Policy Paper) listing economic sectors and industries to be delegated and assigned to local and foreign legal persons.

The Policy Paper shall be submitted to the Minister. The Minister shall table the Policy Paper to the Government of the Republic of Srpska within 15 days from the day of receiving, and within 30 days from the day of receiving the Government shall give its opinion. The Government of the Republic of Srpska shall table adopted Policy Paper to the National Assembly for adoption and approval.

The Policy Paper shall be published in the "Official Gazette of the Republic of Srpska".

The Commission shall supervise the implementation of Policy Paper and submit an annual report to the Government of the Republic of Srpska.

The Commission, on its own initiative or upon request from any interested person, may formulate general principles or suggest the implementation of specific regulations regulating certain sector of economy or industry.

The Commission shall advise the Minister on any matter the Minister had submitted to the Commission, and on its own initiative it may advise the Minister on any matter within its jurisdiction.

If so agreed between the interested parties, the Commission may arbitrate any dispute occurred between contracting parties and it may act as a mediator upon request from interested parties.

Upon submission of request by any interested party, the Commission shall make a decision in order to protect the rights of interested parties.

If warranted to protect the public interest, the Commission may request that the Government of the Republic of Srpska bears the costs of participation of experts in public hearings.

The Commission shall cooperate with other bodies established pursuant to the laws of the Republic of Srpska.

The Concessionaire shall compensate in accordance with the Law on Stamp Duties, the entirety or a part of costs incurred in examining any matter submitted to the Commission or costs incurred in implementing the decisions or orders of the Commission.

Article 15

Funds for Operation of the Commission


The funds for operation of the Commission are provided from the budget of the Republic of Srpska.

The use of funds by the Commission shall be subject to audit by the body in charge of audit of financial operations of the institutions of the Republic of Srpska.

The Commission shall prepare an annual financial statement and include it in the report on its operation during preceding fiscal year and submit it via the Government of the Republic of Srpska to the National Assembly for adoption.

Article 16

Operation of the Commission


The President of the Commission shall coordinate the work of the Commission and be responsible for work of the personnel.

Should the President of the Commission be absent or unable to act, the Vice-President shall act as the President of the Commission.

Applications filed with or requests for approval or reconsideration/review submitted to the Commission pursuant to this Law shall be examined and decided on by at least three Commissioners.

In execution of assigned public authority, the Commission shall operate and solve the requests according to the rules of administrative procedure.

Article 17

Decisions of the Commission


Decisions of the Commission shall be made in writing and include the rationale.

The Commission shall forward without delay a certified copy of its decision to the participants and the competent Ministry, and upon request from the Minister, the copies of other documents as well.

The Secretary of the Commission shall have custody of the records and execute other tasks assigned to him/her by the President of the Commission.

Decisions of the Commission shall be published in the Official Gazette of the Republic of Srpska.

All documents signed by the President or the person authorized by the President shall be authentic.

A copy of any document of the Commission signed by the President or authorized person shall be deemed authentic.

It is not allowed to file a complaint against the decision of the Commission but an administrative lawsuit may be brought by lodging of a complaint to the Supreme Court of the Republic of Srpska within 30 (thirty) days from the day of receiving of decision.

Article 18

Reporting Obligation


The Commission shall submit a report on its activities during preceding fiscal year to the Government of the Republic of Srpska not later than 31 May of the current year.

The report shall include the data on submitted requests, those for review, decisions of the Commission, and number and nature of and answers to any inquiry the Commission considered. The report shall also contain any other information concerning the work of the Commission required by the Minister.

Upon consideration, the Government of the Republic of Srpska shall table the report to the National Assembly for adoption within 30 (thirty) days from the day of receiving.

The report shall be published in the Official Gazette of the Republic of Srpska.

Article 19

Public Hearings


The work of the Commission shall be public when considering the proposals of citizens and when required so by the Minister.

The Commission may also hold a public hearing on any matter within its jurisdiction if the public interest so requires.

Before holding a public hearing the Commission shall issue written instructions setting the date for submitting of all necessary documents and information and the date of hearing, and shall provide all needed information it deems necessary.

The Commission may require that the participants submit their opinion and evidence in writing.

The Commission may prohibit or restrict the disclosure, publication or release of any information or documents if the nature of that document or the protection of public interest so requires.

Article 20

Reexamination of the Decisions of the Commission


Upon request for reexamination of the decision of the Commission submitted within 60 (sixty) days from the day of making of decision or ex officio, after the reexamination of the decision, the Commission may revise or revoke the same if:

    * a new fact is established which would have influenced the making of a different decision had it been known at that time, and

    * interested party was unable to present the observations concerning the decision for sufficient cause.

The Commission may rectify a decision if it contains an error in writing or calculation or any clerical error, upon its own initiative or upon request from interested party.

The Commission or any interested person may keep a certified copy of a decision or order made under this Law with the office of the clerk of the relevant court, with which the Concessionaire is registered according to the laws of the Republic of Srpska.

The kept decision or order has the same force and effect as the decision of the relevant court with which the Concessionaire is registered according to the laws of the Republic of Srpska.

Article 21

Rules of the Commission


With agreement from the Government of the Republic of Srpska, the Commission shall make the rules on:

    * procedure to submit requests, presentations and complaints to the Commission, to conduct hearings before the Commission and other issues concerning the work of the Commission;

    * sessions and number of Commissioners to examine the request;

    * concentration of ownership and measures in order to allow the growth of competition in particular sector, if this issue is not regulated by other regulations;

    * modalities of disputes resolution;

    * internal organization and way to establish the criteria for setting the level of remuneration, and establishment of remuneration.

The rules shall be published in the Official Gazette of the Republic of Srpska.

Article 22

Inspection and Verification of the Work of Concessionaires


The President of the Commission may designate another person in writing to perform the inspection and verification of the work of Concessionaires.

Person designated according to paragraph 1 of this Article may:

    * enter the building or property of the Concessionaire at any reasonable time;

    * examine and make copies of books, records, reports, files or other documents relating to the activities of the Concessionaire; and

    * require any information or document needed for enforcement of this Law.

The person having custody, possession or control of books, records, reports, files or other documents shall allow access and verification of the same upon request of designated person.

Designated person shall be obliged to prove his/her professional identity.

Neither Concessionaire nor any other person may hinder the work of designated person, give or certify a false statement during the execution of inspection or verification.

III TENDERING PROCEDURE

Article 23

Concession Project Approval


The Conceding Party shall prepare a feasibility study on any project to be granted as a Concession prior to public invitation of potential bidders (hereinafter referred to as the public invitation).

The feasibility study shall be submitted to the Commission for consideration and approval.

The Commission shall inform the relevant body on the approval of project within one month from the day of receiving of the study.

In rendering its decision the Commission shall have due regard to:

    * impact of project on the supply of services to the customers;

    * impact of project on the fee charged to the customers;

    * whether the project falls within the objectives set in the Policy Paper;

    * whether the project is of net benefit to the Republic of Srpska.

In case the Commission does not approve the project, it may suggest or recommend such changes as would render the project acceptable.

Upon approval of the project, the Conceding Party shall organize a public invitation and invite the persons that have qualified. The invitation shall be sent to the biggest possible number of addressees and if the Commission requires so, an international invitation shall be sent as well.

Subject to the approval of the Commission the request for qualification may be issued by the Conceding Party prior to public invitation. The request for qualification shall be published and distributed to persons recognized for their expertise as well as business practices and financial strength. Request for qualification shall contain also the criteria to be used in the process of selection.

Article 24

Public Invitation


Public invitation shall include:

   1. project description;

   2. definition of economic and legal conditions and requirements applicable to the project;

   3. principles and methods of calculation of concession fee;

   4. amount of concession fee and fee and duty for participation in public invitation;

   5. description of assets and property to be made available to the Concessionaire;

   6. criteria pertaining to evaluation of tenders and granting of Concession, based on clear, transparent and non-discriminatory principles accessible to all;

   7. deadline for submitting of tenders;

   8. draft of Concession Contract;

   9. list of all necessary permits, licenses and other authorizations; and

  10. tax incentives attached to the project, if any.

In case the Conceding Party fails to prepare a feasibility study the Commission may require that public invitation include the obligation for bidders to prepare a feasibility study with environmental impact assessment. Feasibility study shall be considered in the evaluation of criteria pertaining to the granting of Concession.

Article 25

The Conceding Party shall submit to the Commission a proposal of public invitation and related documents for consideration and approval.

Within 21 days from the day of receiving of proposal of public invitation, the Commission shall inform the Conceding Party whether the invitation is approved.

In considering the proposal of public invitation the Commission shall take into account all basic elements, including:

    * whether the evaluation criteria, the procedure and selection of successful tender are satisfactorily based on clear, transparent and non-discriminatory principles accessible to all;

    * whether the proposal of public invitation substantially deviates from feasibility study approved by the Commission.

The Commission may give recommendations pertaining to each submitted invitation. Such recommendations are binding.

Article 26

Granting of Concession

Upon proposal from the Commission, the Government shall grant a Concession to the most favorable bidder having met and satisfied all the criteria set in public invitation and being of a higher rank compared to all other bidders.

The Commission shall, as promptly as possible, be notified of the selection of successful bidder.

The Commission shall receive a copy of Concession Contract as well as copies of all project documentation in its final form.

Article 27

Unsolicited Proposal


In the event that a bidder submits to the Ministry a proposal for Concession for which there was no public invitation, the Ministry shall evaluate whether there is public interest for such a Concession.

In evaluation of proposal from paragraph 1 of this Article, particular attention shall be paid at:

    * the fact that the project subject to proposed Concession can be achieved only with process, design, methodology or concept of engineering for which the bidder owns exclusive rights;

    * urgent need for providing services or for existence of infrastructure for public use.

The Ministry shall submit a request to the Commission for obtaining of authorization to negotiate with bidder if it estimates that there is public interest for the Concession.

The Commission shall as soon as possible inform the Ministry whether the granting of authorization is approved or not.

The authorization given by the Commission may prescribe the right of the Commission to monitor the process and/or review the documentation.

The Conceding Party may not conclude a Concession Contract based on unsolicited proposal unless granted the authorization by the Commission; and in that case the Concession is granted according to the procedure set by this Law.

IV CONCESSION CONTRACT

Article 28

Contents of Concession Contract


The Concession contract shall contain in particular:

   1. rights and obligations of contracting parties, including the obligation to provide reliable services to customers at the lowest price given the circumstances,

   2. activities related to obtaining necessary authorizations for execution of activities in accordance with the Concession Contract,

   3. investment requirements,

   4. facilities and occupation of land,

   5. assets and property made available by the Government of the Republic of Srpska,

   6. terms and conditions for renewal of Contract,

   7. sanctions and fees for nonperformance of obligations of contracting parties,

   8. termination of Contract and procedure in case of termination prior to the expiry date set by the Contract,

   9. modalities of disputes settlement, including international arbitration if agreed so by the parties,

  10. measures for facilitating project financing,

  11. description of developments regarded as force majeure,

  12. tariff evaluation and adjustment,

  13. other elements relevant to the subject of Concession.

The Concession Contract shall have a definite term, which may not exceed 30 years. Unless exceptional circumstances occur requiring a longer-term investment, the term may be extended but may not exceed 50 years. The Concession Contract may be subject to renewal for a period not exceeding half of the original term.

The Concession Contract may not be assigned to another Concessionaire without prior approval of the Commission. In case the Concessionaire fails to fulfill its obligation assumed towards an international institution of which Bosnia and Herzegovina is a member, the Concession Contract may be assigned to concerned institution without approval of the Commission.

In reviewing the request for approval, the Commission shall have due regard to:

   1. financial condition of proposed new Concessionaire,

   2. expertise and ability of proposed new Concessionaire to provide services and perform its obligations under the Concession Contract,

   3. impact of assigned Concession on concentration of ownership within specific sector of activity.

A new Concessionaire shall assume the rights and obligations of the former Concessionaire.

A new Concession Contract shall be concluded and carried out in accordance with the regulations of the Republic of Srpska.

Article 29

Termination of Concession Contract


A Concession Contract shall terminate if:

   1. agreed term expires pursuant to this Law,

   2. bankruptcy proceedings are taken against the Concessionaire,

   3. subject to the Concession ceases to exist,

   4. Concession Contract terminates.

Article 30

Breaking of Concession Contract


A Concession Contract shall break if:

   1. the Concessionaire is insolvent or bankrupt,

   2. the Concessionaire or the Conceding Party fails to fulfill its obligations under the Contract.

V THE CONCESSIONAIRE

Article 31

Legal Status of the Concessionaire


The Concessionaire is a legal entity established pursuant to the laws of the Republic of Srpska with whom the Conceding Party shall conclude a Concession Contract, and having the rights and obligations under this Contract and this Law.

Article 32

Rights of the Concessionaire


The Concessionaire has the right to own and use the assets and property made available by the Conceding Party in accordance with the Concession Contract.

Article 33

Obligations of the Concessionaire


The share capital of the Concessionaire shall be held by persons listed in tender documentation. Not more than 30% of voting rights can be transferred, directly or indirectly, without approval of the Commission.

The Concessionaire may not perform any activity other than that described in Concession Contract.

The Concessionaire shall prepare standard services contracts regulating business relationship between the Concessionaire and users of services, subject to approval of the Commission.

VI PENALTIES

Article 34

Penalties


A fine in the amount from 500.00 KM to 15,000.00 KM shall be imposed for breach on the Concessionaire who gives a false statement in order to secure a transfer of participation, shares or share certificate or on the bases of which the Commission issues authorization to transfer.

A fine in the amount from 50.00 KM to 1,500.00 KM shall be imposed for breach on person responsible in behalf of the Concessionaire for activities given in paragraph 1 of this Article.

A fine in the amount from 50.00 KM to 500.00 KM shall be imposed for breach on persons given in paragraphs 1 and 2 of this Article if:

a) they fail or refuse to fill in and return blank documents in a way specified by this Law; b)

c) they fail or refuse to answer the questions asked in the documents; d)

- intentionally give incorrect answer to any of the questions;

- avoid answering the questions that could establish the facts because of which the inquiry is made;

- upon request from the Commission, refuse to submit to the Commission or a Commissioner or a person authorized to review books, documents, accounts, files or records of several Concessionaires;

- fail or refuse to perform any duty entrusted to him/her, for which a penalty is not provided; or

- fail or refuse to obey any requirement or order made by the Commission or any decision of the relevant court.

In construing and enforcing the provisions of paragraph 3 of this Article, the act, omission or failure of any director, officer, agent or other person acting in behalf of or employed by any Concessionaire and acting within his/her scope of employment and instructions shall in every case be deemed to be the act, omission or failure of such Concessionaire.

VII FINAL PROVISIONS

Article 35

Final Provisions


On the day of entry into force of this Law, the application shall cease to have effect of laws and provisions of special regulations on concessions that have been applied on the territory of the Republic of Srpska before the day of entry into force of this Law.

A Concession Contract made in violation of the provisions of this Law shall be null and void.

Article 36


This Law shall enter into force on the eighth day following the publication in the Official Gazette of the Republic of Srpska.

President of the National Assembly

Dr Dragan Kalinić

Commission for concessions of the Republic of Srpska is standing, independent regulatory legal body constituted in purpose of granting of concessions, the competences and obligations of which are identified by this Law...


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