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2. CONCESSION LAW

Basic Provisions

1. Subject Matter of the Law

This Law shall govern the conditions for, modality of and procedure for granting a concession for the use of natural resources or goods in general use, which is the property of the Republic of Serbia under law, and for the conduct of a business of general concern, the subject matter of concession, the contents of concession agreements, the authorities competent for granting concessions, the rights to benefits, the severance and dissolution of a concessionary relationships, the project financing according to the B.O.T. system, the organization competent for dealing with technical matters associated with concessions, and other matters of importance for the utilization of concessions.

2. Notion of Concession

For the purposes of this Law, a concession shall be understood to mean the right to exploit natural resources or goods in general use, granted to a domestic or foreign person (hereinafter: the Concessionaire) by a competent state agency (herein after: the Conceder) under specially prescribed conditions and against a suitable compensation.

For the purposes of this Law, a concession shall be understood to mean also the issuance to the persons referred to in paragraph 1 of this Article of licenzes for conducting business of general concern.

For the purposes of this Law, a domestic person shall be any legal entity whose head office is in the territory of the I FRY and any individual whose residence has been in the territory of the FRY for at least two years.

A foreign person shall be understood to mean any person defined as such in the federal foreign investment regulations.

3. Special Form of Concession (B.O.T. System)

For the purposes of this Law, the special form of concession shall be understood to mean the letting of the construction of a building, installation or plant, on the basis of the B.O.T. system (build-operate-transfer), under an agreement concerning the construction and financing of a complete building, installation or plant, its operation and transfer to the Republic of Serbia within the contracted term, which shall not be longer than 30 years.

4. Concession Granting Conditions

A concession may be granted in order to provide for:

1. Rational exploitation of natural resources or goods in general use;
2. Technical and technological advancement of the business constituting the subject matter of a concession and technical and technological uniformity of systems in the field of infrastructure, and efficient operation and rational control of such systems;
3. Protection and improvement of the environment in conformity with the environmental protection regulations.

Natural resources and goods in general use, as well as buildings, devices and installations exploited by public enterprises founded by the state or a local government unit, may be conceded to another person, provided that such public enterprises are unable to provide for their rational exploitation or trouble free operation in conformity with the regulations governing the conduct of the business of such enterprises.

5. Subject Matter of Concession

The following may constitute the subject matter of a concession:

1. Prospecting for, or prospecting for and exploitation, or only exploitation of all kinds of mineral raw materials;
2. Construction, maintenance and exploitation of water management facilities (dams, water storages) and water supply systems, and irrigation and drainage systems;
3. Construction, maintenance and exploitation of roads, power supply facilities, construction of railways and other railway facilities, air transport facilities, airports, oil pipelines, gas pipelines;
4. Construction, maintenance and exploitation of public utility facilities, for the purpose of providing public utility services;
5. Construction, maintenance and exploitation of telecommunications facilities, or their remodeling, modernization and exploitation;
6. Development and exploitation of river banks and lake shores and construction of facilities, for the purpose of conducting business;
7. Construction of facilities, remodeling, modernization and exploitation of in spas and localities having natural curative properties and other natural values, for the purpose of their exploitation;
8. Remodeling, modernization and exploitation of the existing facilities as those referred to in Item 3 of this Article, for the purpose of conducting business;
9. Pursuing such lines of business as are designated by law as lines of business of general concern.

Foreign persons may not be granted concessions for such activities as for the pursuit of which foreign persons may not be co-founders of enterprises under foreign investment regulations, and for activities in the areas that are designated as restricted zones under federal law.

6. Duration of Concession

A concession may be granted for a period of up to 30 years.

The duration of a concession shall be set depending on its subject matter and anticipated profit from the concessionary activity involved.

The period for which a concession has been granted may be extended in exceptional cases because of a substantial change in the conditions under which the concession was granted, though only up to the term referred to in paragraph 1 of this Article;

The duration of a concession shall not include the time necessary to carry out the work preparatory to the construction of facilities and for the concessionary activity to be started up. The duration of preparatory work shall be specified in the concession agreement.

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