Risk Factors for PPP: the Case of HZMB Project in GPRD Metropolitan
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Risk Factors for PPP: the Case of HZMB Project in GPRD Metropolitan
Risk Factors for PPP: the Case of HZMB Project in GPRD Metropolitan
Yao Yi, Associate ProfessorGuangzhou Academy of Social Sciences, China
HZMB Background
Hongkong-Zhuhai-Macao Bridge
PPP Development in China
• Shajiao Thermal Plant, Shenzhen, 1988• Labin Power Plant, Guangxi, 1995
• National Olympic Stadium, 2003•Beijing Subway No.4 Line, 2005
First Round
Second Round
• No PPP national law or regulation• No PPP control organization Legal FrameworkLegal Framework
Financing HZMB
Early 2008
End 2008
1990s
Estimated:
$ 2 billion
Funding Scheme by GD, HK, Macao:
Bridge: $6.3 billion
Overall: $9 billion
COST: Keep Rising
Feasibility Report:
Overall: $11 billion
Feasibility Report:
Overall: $11 billion
Funding Model: from BOT to Government Funding
BOT Model
Early 2008:
Private investorGovernment subsidy
Government Funding
End of 2008:
Government capital fund bank loans
Stake Holders:
Government 1
Private sector2
public3
Stake Holders:
Government
Stake Holders:
Private sector: Attitude: active→ less interested
Interests: profit prospect diminished
Public opposition: law case in 2010,
1 year delay & 5% cost rise
Barriers for PPP in HZMB Case
Huge investment vs. Low market return
Legal constraints
Project coordination
Conclusion: Risk Factors for PPP
Market return risk
Public opposition
Lengthy decision-making process
Loss of project uniqueness
RISK