PPP PRACTICES OF VARIOUS SECTORS IN CHINA¼ˆ2... · 3. PPP contract Drafting Procurement 1. Performance monitoring 2. Interim assessment 3.Supplementary agreement Implementation

PPP PRACTICES OF VARIOUS SECTORS IN CHINA: Waste-to-Energy, Water Environ Conservancy, Integrated Urban Development

LEO ZHANG, Chairman

Guiyang, China, Sept 12th 2018

1

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

3

4

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

5


PROJECT PROFILE

Procurement Optimization

Well-designed Supervision System

Connecting Future Venous Industrial Park

6

• 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


7


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

10

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

11


PROJECT HIGHLIGHT

12


Performance Monitoring System

Leaders Inspection in April 2016

3

13

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


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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.


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

18


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

01

03

04

02

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

: [email protected] [email protected]

Documents

PPP PRACTICES OF VARIOUS SECTORS IN CHINA¼ˆ2... · 3. PPP contract Drafting Procurement 1. Performance monitoring 2. Interim assessment 3.Supplementary agreement Implementation