PPP PRACTICES OF VARIOUS SECTORS IN CHINA¼ˆ2... · 3. PPP contract Drafting Procurement 1....
Transcript of PPP PRACTICES OF VARIOUS SECTORS IN CHINA¼ˆ2... · 3. PPP contract Drafting Procurement 1....
PPP PRACTICES OF VARIOUS SECTORS IN CHINA: Waste-to-Energy, Water Environ Conservancy, Integrated Urban Development
LEO ZHANG, Chairman
Guiyang, China, Sept 12th 2018
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1. Case A: Waste-to-Energy
2. Case B: Water Environ Conservancy
3. Case C: Integrated Urban Development
4. Summary: How to Use Consultants in P3 Projects
CONTENTS
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Case A: Waste-to-Energy 1
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Leshan WtE (Waste-to-Energy) Project
Case A: Waste-to-Energy
• Municipal solid waste(MSW) treatment: 1000
tons per day;
• Landfill leachate treatment, incineration,
power generation
GOAL & CAPACITY
• Total investment: 0.65 billion Yuan
• Concession duration: 30 years (Now in the
construction stage)
• Location: Leshan City, Sichuan Prov (SW China)
MAJOR INDICATORS
• The First and ONLY WTE project in Leshan City
with integrated environmental protection and
economic development.
SIGNIFICANCE
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Leshan WtE (Waste-to-Energy) Project
PROJECT PROFILE
Procurement Optimization
Well-designed Supervision System
Connecting Future Venous Industrial Park
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• Lower the weight (less than 30%) of bidding price and increase the technique requirement.
• The bidder must make explanations if bid an extreme low price. (containing unreasonable bid)
• As the project is environmentally sensitive, it establishes a supervision system, covering the project company, contracting authority, environmental enforcement agencies, professional service company, public community etc.
• The project takes fully consideration of possible future needs for construction waste and sludge treatment, and plans for the venous (circular economy) industrial park.
PROJECT HIGHLIGHT
Leshan WtE (Waste-to-Energy) Project
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Leshan WtE (Waste-to-Energy) Project
Latest Progress of Construction
Case B: Water Environ Conservancy 2
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Nakao River Basin
Pollution Treatment & Integrated
Regulation Project
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Case B: Water Environ Conservancy
• Nanning is a provincial capital city abound with water. Nakao River is one of major inland waterways in Nanning. Local gov. regarded this project as the top 1 project that year.
GOVERNMENT
PREPARATION
• River pollution treatment, sewage control,
ecological rehabilitation, coastal landscape,
LID(Low Impact Development), monitoring
system
PROJECT CONTENT
• Total investment:RMB 1.1 billion
• 4 monitoring cross-section and 4 monitoring
point of water quality and yield.
MAJOR INDICATORS
• 1st PPP project in China including both inland
river basin pollution treatment & integrated
regulation and LID. Operator was paid
according to performance.
SIGNIFICANCE
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Nakao River Basin Pollution & Integrated Regulation Project
PROJECT PROFILE
• Firstly use competitive negotiation in the
procurement of the private party. PROCUREMENT METHOD
• The private party is responsible for the design,
investment, construction and operation in the
whole lifecycle of the project. Efficiently
improve the quality of the management.
QUALITY IMPROVEMENT
•The project company works as a entity,
overcome the traditional drawback of multiple
investment, multiple management and the
government is easier to supervise.
EFFICIENCY PROMOTION
• There are 103 performance appraisal indicators,
focusing on the water quality, water yield and
flood control.
WELL-DESIGNED
PERFORMANCE APPRAISAL
SYSTEM
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Nakao River Basin Pollution & Integrated Regulation Project
PROJECT HIGHLIGHT
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Nakao River Basin Pollution & Integrated Regulation Project
Performance Monitoring System
Leaders Inspection in April 2016
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Case C: Integrated Urban Development
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China Fortune Land Development (CFLD) New Industry Cities
Case C: Integrated Urban Development
Design
Construction
Industry Development Service(Attracting Investment) Operation &
Maintenance
Land Consolidation
CFLD New Industry Cities: Gu’an Project
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5 core functions
of concessionaire
Project Transaction Structure
CFLD New Industry Cities: Gu’an Project
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固安县产业新城发展专项资金
购买服务付费根据绩效付费
固安县财政局
项目公司
固安县政府 依法设立
授权担任实施机构代表政府签署PPP合同
固安高新区管委会 PPP项目协议
固安县高新技术产业开发区
规划、土地一级开发基础设施建设维护、产业发展
金融机构 债权资金投入
中选社会资本100%
入园企业、社会公众招商引资、提供公共服务及设施
还本付息 使用者付费
区域经济表现
拉动经济
拨付专项资金
绩效监测
区域就业表现固安县政府指定机构
终止移交 带动就业
受托管理
创造税收
Government
• Governments set the direction of the city development; CFLD develops the blueprint to ensure success and sustainability in New
Industry Cities.
• The city will be developed by improving livelihoods, advancing industries, as well as creating economic and social
growth.
Investor
• CFLD provide service for investors and enterprises in the industry park, such as one-stop human capital service, customized industrial estate products, logistics service, business advisory
center.
• Those services are also performance indicators in one project.
Public Community
• Local people can
experience the
development of their
area and monitor the
economic and
ecological
performance of the
new industry city.
CFLD New Industry Cities: Gu’an Project
Benefits for different participants
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PPP Turnkey
PPP Mechanism,Integration of city residence and industry
development ( job creation) to avoid sleeping city
PPP Solution,comprehensive solution for area development
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CFLD New Industry Cities: Gu’an Project
PROJECT HIGHLIGHT
Summary: How to Use Consultants in P3 Projects 4
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Startup (Pilot
Projects)
Promotion
(Concession
flourish)
Trough(Mega
Stimulate
Package)
Booming
(Bunch of
policies)
Modification
(Risk Control)
1984-2002 2002-2008 2009-2013 2014-2017 2018
4.1 Development of PPPs in China
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1. Preliminary
Business Case
2. Value for
Money
evaluation
3. Fiscal
Affordability
Assessment
Identification
1.Business
Case
2. Financial
analysis
3. Market
testing
4. VfM
verification
5. FAA
verification
Preparation
1. Prequalification
2. Procurement
document
Releasing
3. PPP contract
Drafting
Procurement
1. Performance
monitoring
2. Interim
assessment
3.Supplementary
agreement
Implementation
1. Transfer
standard
2. Performance
test
3. Asset
transfer list
4. Post-
Evaluation
Transfer
Identification Preparation Procurement Implementation Transfer
4.2 PPP Project Cycle: Experience in China
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Transaction period Performance Monitoring & Regulation
4.3 PPPs Market in China
• past four years witness a surge of PPPs
• By the end of June 2018, the number of PPP projects amounts to 12,549(7,749 in management database, 4,800 in pre-pipeline list)
• Total investment: RMB 17.3 trillion(11.9 trillion in management database, 5.4 trillion in pre-pipeline list)
Before 2011 2012 2013 2014 2015 2016 2017 Deal number 43 118 244 769 5992 4912 1981 Value(billion) 61.324 191.6 313.892 1197.724 7176.42 5866.363 2936.47
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SOURCE: CPPPC (MoF of China)
BILLION NUMBER
0
1000
2000
3000
4000
5000
6000
7000
8000
0
1000
2000
3000
4000
5000
6000
7000
Before2011
2012 2013 2014 2015 2016 2017
PPP Project—deal and value
Amount Scale(billion)
4.4 Distribution of PPP Application Sectors
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TOP 3 Sectors:
• Transportation
• Municipal Works
• Eco-Rehabilitation and
Environmental Protection
SOURCE: CPPPC (MoF of China)
NUMBER
0
5000
10000
15000
20000
25000
30000
35000
0
500
1000
1500
2000
2500
3000
Social Se
curity
Fore
stry
Agricu
lture
Ene
rgy
Techn
olo
gy
Spo
rts
Sen
ior C
are
Go
vernm
ent…
Cu
lture
Edu
cation
Health
Care
Oth
ers
Wate
r Co
nse
rvancy
Affo
rdab
le H
ou
sing
Tou
rism
Ecolo
gical…
Inte
grated
Urb
an…
Transp
ortatio
n
Mu
nicip
al Wo
rks
Distribution of PPP Application Sectors
Deal Number Volume
Ten Thousand yuan
Capacity
Preparation
(officials,
investors,
advisors)
Supporting Legal &
Policy in place
Political willingness
4.5 Core Successful Factors to Make PPPs Work
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Transaction
Advisor
Financial
Advisor Legal Advisor
Technical
Advisor
Procurement/
Tendering
Agent
Typical Transaction Advisory Team for government
4.6 Transaction Advisor- A team of Consultants in China’s PPP
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4.7 Work Scope of Transaction Advisor
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Financial Closing
Procurement of private partner
preparing tendering doc drafting PPP agreements site investigation &
clarification solicited tendering &
evaluation negotiation with preferred
bidder assisting signing agreement
get approval from government
Project Preparation
Value for Money evaluation Fiscal Affordability Assessment PIM for market testing finalizing business case
Conception development & evaluation viability
check & evaluation of FSR preparing prelim. business case market sounding viability evaluation(technic,
financial, legal, operational etc) amending business case
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Scenario: • Lack of professional capacity and capital to carry on planning,
feasibility study and preparation. MUMMY PROJECTS • Constrains of host country debt ceiling hinder using of traditional
way: preferential loan + EPC • Short of industry investment even if constructing infra facility,
resulting in unsustainable & unstable development desperately locked by the Late Comer Curse? Where’s the way out?
Solutions: • One-stop advisory services consisting of governance advice, urban
planning, project design & channel FDI, aiming to overall develop a specific area of 20~50 km2
• dedicated team of oversea business solution who partnering with clients to deliver touchable results
• Assist to integrate international (including Chinese) experts, consultants, planner, contractor, financier and manufacture operator, creating tax-income and accelerating urbanization
4.8 General Advisor for Host Governments on BRI
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In PPP projects, consulting
companies have the knowledge
of local governments, investors
and contractors, which is
convenience to do market test
and find the most potential
investor.
BRI policy and complex
context give int’l consulting
firms more chances to work
with local partners to fuel
local PPPs
With professional consulting
companies, projects can be
carried forward smoothly. Both
the project speed and quality
will be significantly improved. Knowledge of public
and private parties
Improve Project Quality
4.9 Capability of Consulting Firms to fuel BRI PPPs
Through nearly twenty years practice of
PPP in China, consulting companies in
China accumulate rich project practice
experience.
Strong Capability
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International View
THANKS ! Q & A
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Jumbo Consulting is an independent, professional firm headquartered in Shanghai, China, with expertise in financial, legal, management, risk and regulatory issues within various infrastructure sectors. It was found in 2002 and advised numerous governmental & private clients in and beyond China. More details please see www.jumbocn.com
For professional advice, please contact:
Mr. Jingyi LI, SVP Mr. Zheng CHEN, Associate
: +86-186 2298 7980 +86-187 1013 7194