[**Chenzhou City*** Investment].
*Q&A on the New Mechanism of Private-Private Partnership (4).
In order to facilitate all sectors of society to accurately understand the "Guiding Opinions on Standardizing the Implementation of the New Mechanism of Private-Private Partnership" (hereinafter referred to as the "Guiding Opinions") and standardize the implementation of ** and Private-Private Partnership (PPP) projects, the Investment and Financing Policy Research Center of Tsinghua University has set up a Q&A column on the policy of the new mechanism of Private-Private Partnership, inviting authoritative figures to answer the common questions that are of high concern to all parties.
First, the "Guiding Opinions" put forward the franchise plan "according to the approval authority and requirements of the first investment project, by the relevant parties to perform the review procedures". Which department will be responsible for reviewing the approval of the franchise plan in the future?Is there a need to consult with industry sectors?
According to the "approval authority and requirements of the investment project", the department responsible for the approval of the feasibility study report of the investment project is the franchise plan review department. In practice, if the relevant local regulations stipulate that the franchise plan must be approved by the people at the same level, it is also in line with the spirit of the document. In principle, the responsibility for the review of the franchise plan can be raised, and it is not appropriate to delegate it.
In accordance with the relevant provisions of the "Guiding Opinions", the industry competent department may take the lead in the preparation of the franchise plan as the implementation agency of the franchise project, in which case the opinions of the industry competent department may not be solicited repeatedly. If the project implementation agency is not the competent department of the industry, it is recommended to solicit the opinions of the relevant competent department of the industry.
Second, the franchise program by the "relevant parties to perform the review procedures", "relevant parties" specifically refer to the development and reform department?
Not necessarily. The "Investment Regulations" clearly stipulate the approval authority of ** investment projects, and the relevant projects shall be "submitted to the investment department or other relevant departments for examination and approval in accordance with the ** investment management authority and prescribed procedures". In reality, the approval authority of investment projects in various places is stipulated by each locality and is different, and the "Guiding Opinions" do not change the established approval authority of investment projects in various places. Therefore, the franchise project implementation plan review department should be determined by each locality according to the approval authority of the local investment project.
Third, how to write a franchise plan?What are the main differences between TOT projects and other types of projects such as bots?
The franchise plan should be prepared around the "three aspects and two purposes" of the franchise project. The "three aspects" include the construction content of the project itself, the key content of the franchise agreement, and the feasibility demonstration of the franchise model. The "two purposes" include clarifying the necessity and feasibility of the project construction, and the necessity and feasibility of the project adopting the franchise model. The purpose of reviewing the franchise plan is to ensure that "the project should not be done" and "whether the franchise model should be adopted". For projects such as TOT that do not involve new construction, renovation and expansion, the part of the construction content of the project itself in the concession plan can be appropriately simplified, but it should reflect the relevant situation of the existing assets.
Fourth, what is the implementation process of the franchise project?What is the positioning and focus of the franchise plan review and project approval, approval or filing?
The "Guiding Opinions" clearly stipulate the implementation process of the franchise project. First, the local people at all levels are authorized by the relevant industry authorities and institutions in accordance with laws and regulations as the implementation agency of the franchise project. Second, the project implementation agency takes the lead in preparing the franchise plan with reference to the feasibility study report. Third, the relevant parties shall perform the review procedures of the franchise plan in accordance with the approval authority and requirements of the first investment project. Fourth, the selection of franchisees through open competition such as public bidding. Fifth, standardize the signing of franchise agreements. Sixth, strictly implement the project approval, approval or filing procedures. Seventh, do a good job in project construction and implementation management.
The franchise program focuses on the necessity and feasibility of project construction, and the necessity and feasibility of the project to adopt the franchise model, which is an internal decision-making process. Project approval, approval or filing is the statutory investment management procedures carried out by the relevant departments on investment projects in accordance with the "** Investment Regulations" and the "Regulations on the Administration of Approval and Filing of Enterprise Investment Projects".
Fifth, whether the franchise plan review can replace the feasibility study report approval?
No. The "Guiding Opinions" make it clear that "the project implementation agency should refer to the feasibility study report preparation specifications and take the lead in the preparation of the franchise plan", which means that the demonstration of the core content of the feasibility of the project's own construction in the franchise plan should basically reach the depth of the feasibility study report, in order to make more accurate, scientific and reasonable decision-making, and does not mean that the franchise plan can replace the feasibility study report. The review of the franchise plan is an internal decision-making procedure, and the approval of the feasibility study report is an investment management procedure implemented in accordance with the "Investment Regulations". It should be noted that if the ** social capital cooperation project is not a ** investment project, it is only necessary to perform the approval or filing procedures in accordance with the enterprise investment project when performing the investment management procedures, and there is no need to prepare a feasibility study report.
6. Can local state-owned enterprises serve as implementing agencies?
It is not advisable to choose local state-owned enterprises as project implementation agencies. The implementing agency in a PPP project should be able to represent the requirements of the public interest of the society. When negotiating and signing agreements with concessionaires, it is debatable whether local SOEs have the authority to make commitments and requirements related to public interests.
7. How to understand that "the franchise period shall not exceed 40 years in principle"?According to this clause, can the toll period of the toll road project exceed 30 years?
The "Guiding Opinions" make it clear that "the franchise period shall not exceed 40 years in principle, and the franchise project with large investment scale and long return cycle can be appropriately extended according to the actual situation". Adjusting the upper limit of the franchise term to 40 years will help reduce the annual rate of return requirements of the project during the franchise period, increase the income of the franchisee, and make the franchise project more viable. At the same time, the "Guiding Opinions" also make it clear that the franchise period is "unless otherwise provided by laws and regulations". For toll road projects, the Regulations on the Administration of Toll Roads have clear provisions on the upper limit of the toll period, which shall be implemented in accordance with the regulations.
8. Is it necessary for the franchisee to set up a project company?What is the relationship between the franchisee and the project company?If a franchise agreement is signed in the name of the project company, does it mean that the project company becomes a franchisee?
The franchise project can be implemented directly by the selected franchisee without the need to set up a separate project company. The franchisee may also set up a project company, and the project company shall act as the specific implementation entity and sign a franchise agreement with the implementing agency. The Guiding Opinions clearly state that "if a project company needs to be established, the project implementation agency shall sign an agreement with the franchisee, stipulating that it shall establish a project company within the prescribed time limit and sign a franchise agreement with the project company". The signatory to the agreement that signs the concession agreement with the project implementation agency is not necessarily the franchisee.
9. If only investment subsidies are used to provide financial support, should it be a separate investment by a social investor, and there is no need to perform the approval procedures in accordance with the investment project?
According to the Investment Regulations, there are four main ways to use investment funds, namely direct investment, capital injection, investment subsidies and loan interest discounts. Among them, the project that adopts the direct investment method and capital injection method to arrange the investment is the first investment project, and the approval procedure for the investment project needs to be performed. Investment subsidies and loan interest discounts, in essence, are free support for projects, such projects are enterprise investment projects supported by funds, and the approval or filing procedures are performed, and there is no need to perform the approval procedures.
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