Circular No. 115 of 2023 has some specific references to the ** financial compliance subsidy project, which are now studied and interpreted word by word. The following is the full text and key interpretations:On standardizing the implementation of ** and social capital cooperationGuidance for the new mechanismIn the past ten years, the National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) have played a role in improving public services and stimulating effective investment to a certain extent, but some problems have also emerged in practice. In order to implement the decision-making and deployment, further deepen the reform of the infrastructure investment and financing system, and effectively stimulate the vitality of private investment, the following guiding opinions are hereby put forward on standardizing the implementation of the new mechanism for social capital cooperation (hereinafter referred to as the new mechanism). 1. Accurately grasp the overall requirements of the new mechanismGuided by the Thought of Socialism with Chinese Characteristics in the New Era, thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, adhere to the general tone of seeking progress while maintaining stability, completely, accurately and comprehensively implement the new development concept, accelerate the construction of a new development pattern, focus on promoting high-quality development, coordinate development and security, standardize the implementation of new mechanisms for social capital cooperation, give full play to the role of market mechanisms, broaden the space for private investment, resolutely curb new local hidden debts, and improve the construction and operation level of infrastructure and public utilities projects. Ensure standardized development and sunny operation. (a).Focus on user-paid items** Private-private partnership projects should focus on user-paid projects, clarify the channels and methods of charging, and the operating income of the project can cover the construction investment and operating costs, and have a certain return on investment, and will not increase the responsibility of local fiscal future expenditure due to the adoption of the ** and private-private partnership model. **Under the premise of strictly preventing new local ** hidden debts, complying with the requirements of laws, regulations and relevant policies, in accordance with the principle of equal treatment, the first investment support for user-paid projects during the project construction period can be given; **Payment can only subsidize operation according to regulations, not construction costs. In addition, financial funds shall not be used to make up for project construction and operating costs through any means, such as feasibility gap subsidies, promised guaranteed rate of return, availability payment, etc. [Interpretation] note the red "" here It means that under the premise of strictly preventing new local hidden debts and meeting the requirements of laws, regulations and relevant policies, in accordance with the principle of equal treatment, the project can be given investment support during the construction period of the project and subsidized operation during the construction period. The investment support that can be given during the construction period is in accordance with the provisions of the "Investment Fund Arrangement Method" in document No. 518 of 2020, and the methods include capital injection and investment subsidies. Here, there is a certain contradiction between "giving investment subsidies" and "paying cannot subsidize construction costs". In fact, under normal circumstances, there is no contradiction between the two, because the "investment subsidy" is during the construction period of the project, and the "subsidy operation" is during the project operation period. However, considering that the new PPP mechanism of Circular No. 115 requires "focusing on user-paid projects, and the project operating income can cover the construction investment and operating costs", we suggest that the appropriate way to give investment support during the construction period is capital injection, and at the same time, the proportion of equity should not exceed the prescribed proportion, so as to leave room for private enterprises to participate. (The minimum shareholding ratio of private enterprises in different projects has been listed in the annex to Document No. 115, and is attached to this article) Recently, the state has issued the "Interim Measures for the Management of Private Investment Guidance Special Budgetary Investment (Draft for Comments)" (hereinafter referred to as the "Measures") It is also clear that this special project in principle supports the above areas with the participation of private capital in the public welfare business projects, and the specific funding arrangements are directly arranged by the state to the project, and the capital injection method is adopted. The state-owned property rights or equity rights formed by the budgetary investment are held by the local government. There is a question here: if the investment support adopts the capital injection method, can the implementing agency and other parties be the equity owner of the capital? Can I just hold shares and not pay dividends?
In this regard, the relevant departments have pointed out that according to the "Guiding Opinions", local people at all levels may authorize the relevant industry authorities and institutions in accordance with laws and regulations as the implementation agency of the franchise project. According to the relevant provisions of the "Measures for the Management of Budgetary Investment Capital Injection Projects", the representatives of the investors should in principle be state-owned asset management departments, public institutions, state-owned or state-controlled enterprises. Therefore, if the implementing agency is the competent authority of the industry, it is not appropriate to be the equity owner of the ** capital; If the implementing body is a public institution, the judgment shall be made in accordance with laws and regulations on the basis of the specific circumstances. The investment support arranged in the form of capital injection can only hold shares without dividends or pay less dividends, appropriately improve the level of expected investment income of franchisees, and attract more social capital to participate in the construction and operation of the project.
It must also be noted here that there is a sentence that says "financial funds shall not be used to make up for operating costs", which seems to contradict the previous statement that "** payment can subsidize operation according to regulations". In this regard, we must understand that "compensation" is not the same as "subsidy", and in context, the requirement here is to avoid the risk of investing in social capital. Therefore, as long as the reasonable operating subsidy is carried out in accordance with the relevant regulations, there should be no problem. Otherwise, it will be really difficult to grasp and operate in practice. Regarding the relevant provisions of the subsidy during the operation period of the project, the Investment Division pointed out that it can be understood and grasped from two aspects. First, the first subsidy for the franchise project in the operation stage can not add additional local financial responsibility for future expenditure. **The subsidy for the franchise project should be the general subsidy of the industry, and cannot be a separate subsidy for a single project. Second, the first subsidy for the franchise project in the operation stage should be in line with the principle of "equal treatment". If there is a unified subsidy for a certain industry or a certain type of project, such a project should still enjoy the subsidy normally after adopting the franchise model. As for which situations belong to the "industry-wide subsidy", and under what circumstances does it not constitute a hidden debt? Mr. Bo believes that it should be grasped in accordance with the principle of "existing industry and financial recurrent expenditures for business projects". For the recently created "industry subsidy" in some places, which is actually the most paid-up land development project, its compliance should be carefully analyzed. (B) all adopt the franchise model. ** The private partnership shall be implemented in a franchise mode, and according to the actual situation of the project, the specific implementation methods such as Build-Operate-Transfer (BOT), Transfer-Operate-Transfer (TOT), Reconstruction-Operation-Transfer (ROT), Build-Own-Operate-Transfer (BOOT), Design-Construction-Financing-Operation-Transfer (DBFOT) shall be reasonably adopted, and the ownership of assets during the construction and operation period shall be clearly stipulated in the contract, and the rights, responsibilities and interests of all parties shall be clearly defined. (3) Reasonably grasp key areas. ** Social-private cooperation should be limited to projects with operating income, mainly including transportation projects such as highways, railways, civil aviation infrastructure and transportation hubs, logistics hubs and logistics park projects, urban water supply, gas supply, heating supply, parking lots and other municipal projects, urban sewage and garbage collection, treatment and resource utilization and other ecological protection and environmental governance projects, water conservancy projects with power generation functions, social projects such as sports and tourism public services, and new infrastructure projects such as smart cities, smart transportation and smart agriculture. Urban renewal, comprehensive transportation hub renovation and other projects that organically combine the revitalization of stock and reconstruction and expansion. (4) Priority is given to the participation of first-class enterprises. It is necessary to adhere to the original intention, return to the origin, encourage private enterprises to participate in new construction (including reconstruction and expansion) projects of social capital cooperation to the greatest extent, and formulate the "List of New Franchise (Including Reconstruction and Expansion) Projects Supporting Private Enterprises to Participate (2023 Edition)" (hereinafter referred to as the list, see annex) and dynamically adjust. Projects with a high degree of marketization and weak public attributes should be wholly owned or controlled by private enterprises; For projects related to the national economy and people's livelihood and strong public attributes, the proportion of equity of private enterprises shall not be less than 35% in principle; A small number of projects involving strong public attributes and natural monopoly attributes should actively create conditions and support the participation of private enterprises. For ** and private partnership projects outside the areas listed in the list, private enterprises can be actively encouraged to participate. The participation of foreign-invested enterprises in ** and social capital partnership projects shall be implemented in accordance with the relevant requirements of foreign investment management and with reference to the above provisions. (5) Clarify the division of management responsibilities. The National Development and Reform Commission should take the lead in promoting the franchise model and effectively strengthen policy guidance. Local people at all levels should take the main responsibility and standardize and promote the franchise projects within the scope of their powers. Local people at all levels may authorize the relevant industry authorities, public institutions, etc., in accordance with laws and regulations, as the franchise project implementation agency (hereinafter referred to as the project implementation agency), responsible for the preparation of the franchise program, the selection of franchisees, the signing of the franchise agreement, the supervision of project implementation, and the transfer and acceptance of the expiration of the cooperation period. Local development and reform departments at all levels should play a comprehensive and coordinating role, strictly control the relevant content of the project franchise plan, and perform the duties of project approval, approval or filing in accordance with laws and regulations. Financial departments at all levels should strictly implement the budget management system, strengthen the management of local debts, intensify financial and accounting supervision, and strictly enforce financial and economic discipline. (6) Steadily advance the implementation of the new mechanism. Grasp the intensity and rhythm of work, and the projects that have not completed the bidding and procurement procedures before the clean-up and verification of the ** and social capital cooperation projects in February 2023, as well as the new ** and social capital cooperation projects that are newly implemented in the future, shall be implemented in accordance with the new mechanism stipulated in these Guiding Opinions, and the "Notice of the General Office, the Ministry of Finance, the Development and Reform Commission and the People's Bank of China on Promoting the Guiding Opinions on the Social-Capital Partnership Model in the Field of Public Services" (Guo Ban Fa 2015 No. 42) issued in May 2015 will no longer be implemented. 2. Standardize and promote the implementation of construction(VII) strict review of the franchise program. For the project to be implemented in the franchise model, the project implementation agency should refer to the feasibility study report preparation specifications, take the lead in the preparation of the franchise plan, and in accordance with the approval authority and requirements of the investment project, the relevant parties shall perform the review procedures, so as to reasonably control the content and scale of the project construction and clarify the project output (service) plan. When reviewing the franchise plan, it is necessary to carry out the feasibility study of the franchise model at the same time, and carefully compare and demonstrate whether the project is suitable for the franchise model; If necessary, a professional consulting agency can be entrusted to evaluate and improve the quality of feasibility demonstration. (H) fair selection of franchisees. The project implementation agency shall, in accordance with the approved franchise plan, select the franchisee (including the franchisee consortium, the same below) through open competition in accordance with laws and regulations. The project operation plan, the unit price of the charge, the franchise period, etc. should be taken as important evaluation criteria for the selection of franchisees, and great attention should be paid to their project management experience, professional operation capabilities, comprehensive strength of the enterprise, and credit rating. In principle, the selected franchisee and its investment, financing and construction responsibilities shall not be adjusted, and if it is necessary to adjust, the franchisee selection procedure shall be re-performed. According to the relevant provisions of the state and the project construction investment, operating costs, investment years, etc., reasonably determine the franchise period, and fully protect the legitimate rights and interests of the franchisee. In principle, the franchise period shall not exceed 40 years, and the franchise project with large investment scale and long return cycle may be appropriately extended according to the actual situation, except as otherwise provided by laws and regulations. (9) Standardize the signing of franchise agreements。The project implementation agency and the franchisee shall sign a franchise agreement on the basis of equal legal status and equal rights and obligations. If a project company needs to be established, the project implementation agency shall sign an agreement with the franchisee, stipulating that it shall establish the project company within the prescribed time limit and sign a franchise agreement with the project company. The franchise agreement shall specify the scope of project implementation, output (service) quality and standards, investment income acquisition methods, project risk control, agreement changes, franchise period, etc., and stipulate the rights, obligations and responsibilities of both parties. (10) Strictly implement investment management procedures. For the franchise project that adopts the capital injection method to provide investment support, the approval procedures shall be carried out in accordance with the relevant provisions of the ** Investment Regulations; For projects invested solely by the private party, the approval or filing formalities shall be carried out in accordance with the relevant provisions of the Regulations on the Administration of Approval and Filing of Enterprise Investment Projects. Standardize the performance of project adjustment procedures, complete the approval, approval or filing procedures of the project such as changing the construction site, adjusting the main construction content, adjusting the construction standards and other major circumstances, should be reported to the original examination and approval, approval authorities to re-perform the project review procedures, if necessary, should be re-carried out franchise model feasibility demonstration and franchise program review work. After the legal person of the franchise project is determined, if it is inconsistent with the project legal person when going through the formalities of approval, land use, planning and other procedures in the early stage, the project legal person shall go through the procedures for changing the project legal person in accordance with the law, and the project implementation agency shall give necessary support and convenience. (11) Do a good job in the implementation and management of project construction. The concessionaire should do the preliminary work of the project, optimize the project construction plan in strict accordance with the relevant regulations, reasonably arrange the construction period, effectively control the cost, ensure the quality of the project, and make preparations for operation. For projects with complex geological conditions, large construction risks, and difficulties in maintenance and maintenance, the survey and construction design should be improved, and the construction risk control should be strengthened to prevent the project from being unfinished. After the completion of the project, the completion acceptance and special acceptance shall be organized in a timely manner in accordance with laws and regulations. Projects that require trial operation or trial operation shall meet the corresponding requirements and obtain a trial operation or trial operation permit before being put into trial operation or trial operation. 3. Effectively strengthen operational supervision(12) Regularly carry out project operation evaluation. The project implementation agency shall, in conjunction with relevant parties, monitor and analyze the operation of the project, carry out operational evaluation, assess potential risks, establish a restraint mechanism, and effectively ensure the quality and efficiency of public goods and services. The project implementation body shall make public opinion an important part of the project monitoring analysis and operational evaluation, increase the intensity of public supervision, and carry out performance evaluation in accordance with relevant provisions. (13) Punish violations of laws and regulations and untrustworthy conduct. If the franchisee violates laws and regulations and national mandatory standards, seriously endangers the public interest, and causes major quality and safety accidents or environmental emergencies, the relevant parties shall be ordered to make corrections within a time limit and be punished in accordance with laws and regulations. If the public goods and services provided do not meet the standards agreed in the franchise agreement, the franchisee shall bear the liability for breach of contract in accordance with the agreement. In accordance with laws and regulations, include information on the untrustworthiness of project related parties in the national credit information sharing platform. (14) Standardize the change of franchise agreements and project transfers. During the validity period of the franchise agreement, if it is necessary to change the content of the agreement, the parties to the agreement shall sign a supplementary agreement on the basis of consensus in accordance with the law. If the franchise period expires or is terminated early, the transfer or withdrawal shall be done in accordance with the agreement in accordance with laws and regulations, and it is strictly forbidden to transform the franchise into a disguised debt through the construction-transfer (BT) model on the grounds of early termination; If you intend to continue to adopt the franchise model, you should re-select the franchisee in accordance with the regulations, and the original franchisee can be preferred under the same conditions. If the franchisee needs to be re-selected during the franchise period due to reconstruction and expansion, the original franchisee can be preferred under the same conditions. For all kinds of disputes arising from the franchise agreement, it is encouraged to resolve through friendly negotiation, and if necessary, according to the nature of the dispute, apply for arbitration, apply for administrative reconsideration or file administrative and civil lawsuits in accordance with laws and regulations, and properly handle and resolve them. (15) Establish a normalized information disclosure mechanism. The project implementation agency shall disclose non-confidential information such as the construction content of the project, the results of the winning bid of the franchise, the main content of the franchise agreement, the standards of public products and public services, and the results of the operation assessment, relying on the national investment project approval and supervision platform, to the public in a timely manner. The franchisee shall disclose the quarterly operation of the project, the audited annual financial statements and other information to the public in an appropriate manner. Fourth, increase the intensity of policy guarantees(16) Strengthen organization and implementation. All regions should tighten and consolidate the main responsibility, improve the working mechanism, and carefully organize the implementation. All relevant departments should strengthen coordination and linkage, clarify policies and regulations, and strengthen the implementation of supervision. The National Development and Reform Commission shall formulate the outline of the preparation of the franchise plan, the model franchise agreement and the implementation rules, guide all regions to comply with the requirements of the new mechanism in accordance with the law, implement the ** social capital cooperation project in a steady and orderly manner, and work with relevant parties to revise and improve the franchise-related system documents in a timely manner to create a good institutional environment. (17) Do a good job in factor guarantees and financing support. Support the use of underground space for development and construction without changing the current status of the project's surface in-situ and use status, so as to improve land use efficiency. Support the rational adjustment of land planning use and development intensity in accordance with laws and regulations, promote the transformation and transformation of original assets through the franchise model, and improve the efficiency of asset utilization. Explore the establishment of state-owned construction land use rights at different levels, and support projects to speed up preliminary procedures in accordance with laws and regulations. Encourage financial institutions to provide financing support for franchise projects in accordance with the principles of risk control and commercial sustainability, and use the pledge of expected returns. Actively support eligible concession projects to issue real estate investment trusts** (REITs) in the infrastructure sector. (18) Support innovative project implementation methods. Encourage franchisees to reduce construction and operating costs, increase investment returns, and promote better implementation of social capital cooperation projects through technological innovation, management innovation and business model innovation. On the premise of ensuring the quality and output (service) effect of the project, the franchisee mainly owns the additional income obtained by strengthening management, reducing costs, improving efficiency, and actively innovating. Eligible state-owned enterprises are encouraged to participate in the revitalization of stock assets through the franchise model, forming a virtuous circle of investment. Attachment: List of new franchise (including reconstruction and expansion) projects that support the participation of private enterprises (2023 edition).AttachmentsSupport the new construction of concessions with the participation of private enterprises(including reconstruction and expansion) project list(2023 edition).1. Projects that should be wholly owned or controlled by private enterprises(1) Environmental protection field 1Waste solid waste treatment and waste incineration power generation project (2) municipal field 2Park Infrastructure Project 3Public Parking Lot Project (3) Logistics Field 4Logistics hub, logistics park project (4) agriculture and forestry field 5Agricultural Waste Resource Utilization Project 6Tourism Agriculture, Leisure Agriculture Infrastructure Project 7Forestry Ecology Project (5) Social Area 8Sports Program 9Tourism public service project2. Projects in which the equity proportion of private enterprises shall not be less than 35% in principle(1) Environmental protection field 10Sewage treatment project 11Sewage pipe network project (2) municipal field 12Urban water supply, gas supply and heating projects (3) transportation field 13Intercity railways, resource development railways and branch railways, railway passenger and freight transportation commercial and extended business projects 14Toll road projects (excluding toll road projects with large investment scale and high construction difficulty) 15Low-volume rail transit project (4) logistics field 16Airport Cargo Handling Facility Project 17National logistics hub, national backbone cold chain logistics base project (5) water conservancy field 18Small-scale water conservancy projects with power generation functions (6) New infrastructure 19Smart city, smart transportation, smart agriculture, smart energy project 20Data Center Project 21Artificial Intelligence Computing Infrastructure Project 22Civil space infrastructure projects3. Actively create conditions and support projects in which private enterprises participate(1) Transportation 23Railway projects included in the medium and long-term railway network planning, special plans approved by the state and regional plans24Toll roads and other projects with large investment scale and high construction difficulty 25Urban subway, light rail and urban (suburban) railway projects 26Civil transport airport project (2) energy field 27Rural Power Grid Renovation and Upgrading Project 28Oil and gas pipeline network main line or branch line project 29Oil and gas reserve facilities project (3) water conservancy field 30Large and medium-sized water conservancy projects with power generation functions