A blockbuster document on the new PPP mechanism is released pointing out that it is “difficult to enter the market” for private enterprises
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The reporter learned on the 8th that eight departments including the National Development and Reform Commission recently issued the revised “Infrastructure and Utility Franchise Management Measures” (hereinafter referred to as the “Management Measures”), which were forwarded by the General Office of the State Council to the National Development and Reform Commission and the Ministry of Finance. The “Guiding Opinions on Standardizing the Implementation of the New Mechanism for Cooperation between Government and Social Capital” (hereinafter referred to as the “New PPP Mechanism”) requires reform, standardizes the implementation methods of franchising, and encourages private enterprises to adopt various methods such as direct investment, sole proprietorship, holding, and participation in consortiums. How to participate in franchise projects.
Industry experts said that this document implements the top-level design of the new PPP mechanism in detail, will promote my country’s franchise model to embark on a new path of standardized development and sunny operation, further deepen the reform of the infrastructure investment and financing system, and stimulate the vitality of private investment.
Wu Youhong, a researcher at the Investment Research Institute of the China Academy of Macroeconomics, told reporters that from international experience, franchising is one of the two main types of PPP. Before 2014, my country’s market-oriented reform practices in the infrastructure field drew more on international franchising experience. Especially in 2003, the former Ministry of Construction comprehensively implemented franchise reform in six major areas including urban water supply, gas supply, heating supply, public transportation, sewage treatment, and garbage disposal. The practical results were remarkable and a number of municipal infrastructure investment and operation enterprises were successfully cultivated. .
“The PPP craze that started in 2014 has moved towards the Private Financing Initiative (PFI) model based on public sector (government) payments, and project revenue sources are highly dependent on government payments. As of February 2023, the Ministry of Finance’s PPP project database Among them, 89% of PPP projects are feasibility gap subsidies or pure government payment projects. The franchise model has been weakened and social capital has insufficient motivation to actively innovate, reduce costs and increase efficiency. There are also some projects that avoid PPP management regulations. It was dubbed as a franchise.” Wu Youhong said.
In 2015, six ministries and commissions including the National Development and Reform Commission jointly issued the “Infrastructure and Utility Franchise Management Measures”, which for the first time made systematic institutional arrangements for infrastructure and public utility franchising at the national level, and was instrumental in regulating projects in the franchising field. The implementation of the program provides a strong institutional guarantee. Times have changed, many new situations and new issues have emerged in the field of franchising, and relevant systems and policies have also continued to develop and change. In particular, the “Guiding Opinions on Standardizing the Implementation of the New Mechanism for Cooperation between Government and Social Capital” issued in November 2023 has revised and improved the “Management The Measures put forward urgent needs.
As a key franchise system document, this time the “Management Measures” have been comprehensively revised to meet the requirements of the new PPP mechanism. Among them, in response to the problem of irregular project implementation, the “Administrative Measures” further clarified the scope of franchise projects. Commercial franchise projects and public-private and public-private projects that do not involve the transfer of property rights do not belong to infrastructure and public utility franchises. Local governments are prohibited from operating franchises. Create new administrative licenses and charge fees in the name of franchising to put an end to the phenomenon of “sky-high franchise transfer fees” and return to the public welfare nature of franchise projects.
At the same time, the “Administrative Measures” focus on solving the problem of difficulty for private enterprises to enter the market. Wu Youhong pointed out that in the last round of PPP promotion, state-owned enterprises, especially construction central enterprises, gained more competitive opportunities by virtue of their construction qualifications, performance, financing and other advantages, while private enterprises’ willingness and participation declined. According to statistics from Beijing Mingshu Data Technology Co., Ltd., among the newly won PPP projects in 2015, the number of projects led by private enterprises accounted for 50.76%. Since then, it has been declining, accounting for only 18.33% in 2022, restricting the marketization of the infrastructure field. reform.
In this regard, the revised “Administrative Measures” added a clause to encourage the participation of private enterprises, emphasizing that the implementing agency should determine the number of private enterprises based on the list of new, renovated and expanded franchise projects formulated by the development and reform department of the State Council to support the participation of private enterprises and based on the actual situation of the project. Specific methods of participation; at the same time, the corresponding legal liability provisions are detailed, stipulating that if unreasonable conditions are set to restrict or exclude competition in the selection process of franchisees, and differential and discriminatory treatment is applied to business entities with different ownerships, public officials will bear corresponding legal responsibilities. responsibility.
“The revised “Administrative Measures” clarified the promotion of private investment as the legislative purpose in the general principles, added the sharing of risks between the government and social capital as a basic principle, required that franchisees must be selected through open competition, and eliminated single-source procurement. , direct entrustment and other methods to avoid competition. Financial support measures are specially designed to encourage private enterprises to participate in franchise terms, equal financing treatment for enterprises with different ownerships, and increase support for private enterprises.” The person in charge of the Law Department of the National Development and Reform Commission told reporters.
“It can be expected that the revised “Administrative Measures” will promote the comprehensive return of the franchise model, lay an institutional foundation for ensuring the standardized development and sunny operation of PPP projects, and are of great significance to standardizing the implementation of the new PPP mechanism and strengthening the effectiveness of new policy implementation.” Wu Youhong explain.
Xue Tao, executive director of the E20 Research Institute, said that the revised “Management Measures” are conducive to stimulating new momentum of business entities with higher-quality market mechanisms and higher-level franchise management, laying a solid foundation for the healthy development of PPP in the new stage. Foundation.
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