On November 8, 2023, the Ministry of FinanceGuiding Opinions on Standardizing the Implementation of the New Mechanism for Public-Private PartnershipsEligible state-owned enterprises are encouraged to participate in the revitalization of stock assets through the franchise model, forming a virtuous circle of investment. It is found that in recent years, in order to further revitalize the stock assets and resources in the region and alleviate the pressure on local finances, many state-owned platform companies have innovatively participated in the revitalization of stock assets through the franchise model.
Related Cases
1. Hunan Zhenxiang Industrial Development Group
Hunan Zhenxiang Industrial Development Group is referred to as "Zhenxiang Industry").The majority shareholder is:Linxiang State-owned Assets Service Center, with a shareholding ratio of 100%. Founded on August 23, 2019, the industry belongs to the civil engineering construction industry, and its business scope includes: licensed projects: construction projects; construction engineering design; gas operation; Tap water production and **; ship repair; transportation of general cargo by waterway; inter-provincial general cargo ship transportation, municipal solid waste management services; urban construction waste disposal (removal and transportation), etc.
On July 12, 2023, the Hunan Provincial Bidding and Bidding Supervision Network was releasedLinxiang City Domestic Waste Collection and Transfer Franchise ProjectThe results of the winning bid are announced, and the winning bidder is Hunan Zhenxiang Industrial Development Group30 years, the contract amount is10327.670,000 yuan
Second, the development and construction of the eastern new city in Qijiang District, Chongqing
Development and construction of the eastern new city of Qijiang District, Chongqing City*** referred to as "Qijiang East Company").It is a holding subsidiary of the State-owned Assets Supervision and Administration Commission of Qijiang District, Chongqing, with a registered capital of 22.2 billion RMB. The company was established on September 27, 2008, and the district gave the first development right of land in Qijiang District for the development and construction of the eastern new city in Qijiang District; Responsible for the organization and implementation of infrastructure construction in the eastern new city; Engaged in construction-related business (practicing with qualification certificates); Real estate development and other businesses.
The study found that on October 23, 2023,Xinsheng District, Qijiang District, Chongqing City, carried out a 10-year concession for the construction waste elimination site construction projectThe transferee, the transferee isDevelopment and construction of the eastern new city of Qijiang District, Chongqing, the transaction ** is 689.79 million yuan.
3. Chongqing Urban Construction Investment (Group)**
Chongqing Urban Construction Investment (Group)** referred to as "Chongqing Urban Investment").Founded on February 26, 1993, it is a leading investment and financing platform company under the Chongqing State-owned Assets Supervision and Administration Commission. The paid-in capital is 20 billion yuan. It is mainly responsible for the infrastructure construction of Chongqing. By the end of 2022, the group's total assets were 175.6 billion yuan and revenue was 307.6 billion yuan, the main credit rating AAA.
On September 28, 2023, Chongqing Public Resources Trading Network released the public rental housing franchise procurement project. According to the procurement announcement, the purchasers of the five public rental housing projects are all Chongqing Municipal Housing and Urban-Rural Development Commission, and the project content includes a total of 117453 sets of rentable housing in Kangju Xicheng Public Rental Housing in High-tech Zone, Xuefu Yueyuan Public Rental Housing in Shapingba District, Airport Paradise Public Rental Housing in Yubei District, Jiangnan Waterfront Public Rental Housing in Nan'an District and Liangjiang Mingju Public Rental Housing in Beibei District. On October 13, 2023, the winning candidates for the franchise project of Kangju Xicheng Public Rental Housing Residential Part, Liangjiang Mingju Public Rental Housing Partial Franchise Project, and Jiangnan Waterfront Public Rental Housing Residential Partial Franchise Project were announced, all of which are Chongqing Urban Construction Investment (Group)**The following is the transaction information:
Information on the winning (transaction) of the franchise project of Kangju Xicheng public rental housing part of the franchise project
Liangjiang Mingju public rental housing part of the franchise project bid (transaction) information
Jiangnan waterfrontPublic rental housingResidential partFranchisingInformation on the winning (closing) of the project
Fourth, Jiangsu Pingling electric vehicle service***Jiangsu Pingling electric vehicle service***It was established on March 9, 2021 with a registered capital of 300 million yuan. It is a second-level subsidiary of Jiangsu Pingling Construction Investment Group.
In September 2023, Jiangsu Pingling Electric Vehicle Service won the bid for the photovoltaic new energy investment and construction franchise project in Liyang City. The franchise transfer fee is 180,000 yuan. In order to expand the use of renewable energy, this project plans to use distributed photovoltaic power stations on the roofs of party and government organs, schools, hospitals, state-owned enterprises and other related units. The usable area in the early stage of the project is about 9080,000 square meters, with a total target installed photovoltaic volume of about 13126MW, with the continuous investment in capital construction projects, the roof of more than 1.5 million square meters of projects such as schools, hospitals, park renewal and standard factory buildings (agent construction plants) in the high-tech zone can be delivered in the later period, and the total target installed photovoltaic is about 21684mw。In summary, the rooftop photovoltaic resources controlled by the first in the latter period are about 24080,000 square meters, with a target total installed photovoltaic volume of 34810mw。
FiveChangsha County Xingcheng Water Conservancy Investment and Development
Changsha County Xingcheng Water Conservancy Investment and DevelopmentIt was established on December 16, 2011 with a registered capital of 12.5 billion yuan. It is 100% owned by Changsha Xingcheng Development Group.
On November 22, 2022, Changsha County Xingcheng Water Conservancy Investment and Development won the bid for the water resources concession project of four reservoirs including Baishidong in Changsha County, Hunan Province by Changsha Water Conservancy Bureau. Franchise transfer fee 9400 million yuan. Through the transfer of concession rights, social capital is introduced to be responsible for the possession, use, income, management, operation and maintenance of existing reservoir facilities, providing raw water supply services and agricultural irrigation water supply services, and obtaining water supply service income.
6. The development of cultural tourism industry in Liuyang CityLimited Liability Company
Development of cultural tourism industry in Liuyang CityLimited Liability CompanyIt was established on April 28, 2020, with a registered capital of 10 billion yuan and a paid-in capital of 6 billion yuan. It is 100% owned by Liuyang Urban and Rural Development Group Co., Ltd.
January 10, 2024Development of cultural tourism industry in Liuyang CityLimited Liability CompanyWon the bid for the Liuyang Civil Affairs Bureau's Liuyang City-wide Elderly Care Service Capacity Improvement Franchise Project. Franchise transfer fee 56.8 billion yuan. This project is the transfer of the management right of the first public service stock assets, and after the transfer, the social capital party will carry out reconstruction and expansion according to the actual situation of each pension institution. The winning bidder is responsible for the investment, construction and operation team of the project, and bears all costs, without providing any guarantee. Table 1: Other franchise revitalization cases
Further reading – Franchise operation process
Combined with the "Measures for the Administration of Municipal Public Utilities Concessions", "Measures for the Administration of Infrastructure and Public Utilities Concessions" (Order No. 25 of the Six Ministries and Commissions), the "Investment Regulations" (Order No. 712) and other national level documents, local level documents and related project practical experience, Fangda Consulting shared the operation process of ** franchise projects as follows:
(1) Authorized Implementing Agency
First of all, the first step is to figure out who will lead the way, what to do, how to do it, what you want to achieve in the end, and so on.
Like the old PPP mechanism and the franchise management measures, the document is clearLocal people at all levels may authorize relevant industry authorities and institutions to act as franchise project implementation agencies in accordance with laws and regulations;
Responsible for the preparation of franchise plans, the selection of franchisees, the signing of franchise agreements, the supervision of project implementation, and the handover and reception of cooperation periods.
The people at or above the county level authorize the relevant departments or units as the implementation agency to be responsible for the implementation of the franchise project, and clarify the specific scope of authorization.
Specifically, the relevant departments or units can apply in writing to the people at the same level to start the franchise project, and the people at the same level can clarify the implementation of the franchise model in the form of approval, meeting minutes or power of attorney, etc., authorize the department or unit as the project implementation agency and the specific scope of authorization and other related matters, if you need to appoint a representative to participate in the project company's contribution, you can also authorize it in the document.
The project implementation agency shall, with reference to the feasibility study report preparation specifications, take the lead in the preparation of the franchise plan.
At present, the formulation of the outline and key points of the franchise plan is also being carried out simultaneously, and for the time being, you can refer to the Notice of the National Development and Reform Commission on Printing and Distributing the Outline and Description of the Preparation of the Feasibility Study Report of Investment Projects (Fagai Investment Gui No. 2023 No. 304);
And you can focus on the project output standards, full-cycle costs, charging mechanisms and adjustments, quality and efficiency
risk management and control, the division of responsibilities of all parties, etc
(2) Carry out preliminary work
In accordance with the relevant provisions of the "Measures for the Administration of Infrastructure and Public Utilities Concessions" (Order No. 25 of the Six Ministries and Commissions) and the "Notice on Effectively Implementing the Measures for the Administration of Infrastructure and Public Utilities Concessions" (Development and Reform Regulations No. 2015 1508).
**Franchise items can be adopted:
Build-Operate-Transfer (BOT), Build-Own-Operate-Transfer (BOOT), Build-Transfer-Operate (BTO), as well as Design-Build-Finance-Operate (DBFO), Build-Operate-Transfer (ROT), Build-Own-Operate (BOO), Transfer-Operate-Transfer (TOT), and Operations Management (O&M).
That is, new projects, reconstruction and expansion projects and existing projects can be implemented in the first franchise model.
For new projects and reconstruction and expansion projects, if the investment is made in the form of direct investment or capital injection, the approval system shall be implemented in accordance with the provisions of the Investment Regulations (Order No. 712);
Usually, the implementing agency or the relevant project unit organizes and entrusts the feasibility study unit to prepare the project proposal, feasibility study report, etc., and submits it to the investment department or other relevant departments for approval in accordance with the investment management authority and prescribed procedures.
If it does not involve ** investment, according to the provisions of the Regulations on the Administration of Approval and Filing of Enterprise Investment Projects (Order No. 673), the approval system or filing system is implemented, and the platform company can complete the approval or filing procedures in the early stage, and then change or re-handle the relevant procedures to the name of the franchisee (project company) after the implementing agency signs an agreement with the franchisee (project company).
* For the projects in the catalogue of approved investment projects, the enterprise can submit the project application to the approval authority and go through the project approval procedures; **For projects not included in the catalogue of approved investment projects, it is only necessary to file the relevant information on the project ** supervision platform before the start of construction.
If the ownership or management right of the stock project needs to be transferred, the implementation agency or the relevant project unit usually entrusts the asset appraisal agency to prepare the stock asset (management right) appraisal report, and perform the procedures of state-owned asset appraisal and transfer.
(3) Preparation of implementation plan
Next, it is necessary to finalize the content of the plan, clarify who will check the review, and how to carry out the demonstration and evaluation.
The implementation plan of the PPP project under the old PPP mechanism shall be approved by the people at the same level, and the franchise management measures shall clearly review and approve the implementation plan of the franchise project by the people at the same level or their authorized departments.
The new mechanism is more explicitThe local development and reform departments at all levels strictly control the relevant content of the project franchise plan; The franchise plan shall be approved by the relevant parties in accordance with the approval authority and requirements of the investment project, and the relevant parties shall perform the review procedures.
In layman's terms, it is the local development and reform departments at all levels responsible for reviewing the franchise plan. When reviewing the franchise plan, it is necessary to carry out the feasibility study of the franchise model at the same time, which is in line with the "Development and Reform Investment Regulations 2019 No. 1098" in 2019.
However, it is no longer required to carry out value-for-money evaluation and financial affordability demonstration under the old mechanism, and the "two evaluations and one case" has become history.
(**The two documents before and after, in fact, have already explained that the old and new mechanisms make it clear whose children will be taken away).
The implementing agency can put forward the implementation plan of the franchise project according to the needs of economic and social development, as well as the franchise project proposals put forward by relevant legal persons and other organizations.
According to Order No. 25 of the six ministries and commissions, the implementation plan of the franchise project shall include the following:
Project name; Project Implementing Agencies;
Basic economic and technical indicators such as the scale of project construction, total investment, implementation progress, and standards for providing public goods or services;
return on investment,** and its measurement;
Feasibility analysis, i.e., analysis and estimation of reducing life cycle costs and improving the quality and efficiency of public services;
Draft framework of the franchise agreement and duration of the franchise;
The conditions and selection methods that the franchisee should have;
* Undertakings and guarantees;
the manner in which the assets are disposed of after the expiration of the concession term;
Other matters that should be clarified.
In practice, the implementing agency usually entrusts a professional third-party consulting agency to prepare a franchise implementation plan.
(4) Feasibility assessment
The implementing agency may entrust a third-party agency with corresponding capabilities and experience to carry out a franchise feasibility assessment and improve the implementation plan of the franchise project.
According to Order No. 25 of the six ministries and commissions, the feasibility assessment of the franchise shall mainly include the following:
The whole life cycle cost of the franchise project, the rationality of the technical route and engineering plan, the possible financing method, financing scale, capital cost, the quality and efficiency of the public services provided, the construction and operation standards and regulatory requirements, etc.;
the quality and efficiency of the public services provided, construction and operation standards and regulatory requirements, etc.;
the degree of market development in the relevant field, the status of the construction and operation capacity of market players and the willingness to participate;
Assessment of the public's willingness and ability to pay for user-paid projects.
In practice, the implementing agency usually entrusts a professional third-party consulting agency to complete the feasibility assessment of the project by preparing a feasibility assessment report, and further improve the implementation plan according to the feasibility assessment.
5) Value for money assessment and financial affordability demonstration.
According to Order No. 25 of the six ministries and commissions, "if it is necessary to provide a feasibility gap subsidy or carry out a value-for-money assessment, the financial department shall be responsible for carrying out the relevant work."
The specific measures shall be formulated separately by the financial department"; "Franchise projects that need to provide feasibility gap subsidies shall be strictly in accordance with the provisions of the budget law;
Comprehensively consider the financial affordability and debt risk status, reasonably determine the total amount of financial payments and the amount of annual payments, and connect with the annual budget and medium-term financial planning to ensure the need for fund allocation. ”
In practice, the implementing agency or the financial department usually entrusts a third-party consulting agency to complete the project value for money assessment and financial affordability demonstration report by preparing a value-for-money assessment report and a financial affordability demonstration report.
(6) Review of the implementation plan
The implementation agency in conjunction with the development and reform, finance, urban and rural planning, land, environmental protection, water conservancy and other relevant departments of the franchise project implementation plan review.
Where the implementation plan is found to be feasible after review, each department shall issue a written review opinion according to its duties.
(7) Approval of the implementation plan
The implementation agency synthesizes the written review opinions of each department, and reports to the people at the same level or its authorized departments for approval of the implementation plan of the franchise project.
In practice, the results of the review and approval of the implementation plan are usually clarified by the people at the same level through approvals, meeting minutes, etc.
(8) Preparation of franchisee procurement documents
The implementing agency entrusts the bidding ** and consulting agency to prepare procurement documents and franchise agreements according to the approved franchise project implementation plan.
The procurement documents should indicate whether the establishment of a franchise project company is required.
According to Order No. 25 of the six ministries, the franchise agreement shall mainly include the following:
Project name, content;
franchise mode, region, scope and duration;
The project company's business scope, registered capital, shareholders' capital contribution method, capital contribution ratio, equity transfer, etc.;
the quantity, quality and standard of the products or services offered;
Ownership of facilities, as well as corresponding maintenance and renovation;
monitoring and evaluation; terms and methods of investment and financing;
the method of obtaining revenues, the method of determining the rate of receipts** and the fee scale, and the procedure for adjusting them;
performance guarantees; risk sharing during the franchise period;
* Undertakings and guarantees;
contingency plans and temporary takeover plans;
After the expiration of the concession period, the methods, procedures and requirements for the transfer of projects and assets, etc.;
changes, early terminations and compensation;
liability for breach of contract; dispute resolution;
Other things that need to be clarified.
(9) Procurement franchisees
The implementing agency selects the franchisee through competitive methods such as bidding and competitive negotiation.
If the construction and operation standards and regulatory requirements of the franchise project are clear, and the market competition in the relevant fields is relatively sufficient, the franchisee shall be selected through bidding.
Franchisees selected in accordance with the law shall be publicized to the public.
(10) Sign a franchise agreement
The third and fourth steps are like a marriage, go on a blind date, choose a wishful husband, hold hands, get a certificate with him, and hold a banquet.
The project implementation agency selects the franchisee (or consortium) through open competition in accordance with laws and regulations, and signs a franchise agreement with it, and if it needs to establish a project company, it first signs a preliminary agreement;
After the establishment of the project company, a franchise agreement will be signed with the project company, which is basically consistent with the requirements of the franchise management measures.
The new mechanism does not put forward specific and clear requirements for "open competition", while the franchise management measures propose that several competition methods such as bidding and competitive negotiation can be adopted.
And make it clear that if the construction and operation standards and regulatory requirements of the franchise project are clear, and the market competition in the relevant fields is relatively sufficient, the bidding method shall be adopted.
The implementing agency shall sign a franchise agreement with the franchisee selected in accordance with the law.
Where it is necessary to establish a project company, the implementing agency shall sign a preliminary agreement with the lawfully selected investor, stipulating that it shall register and establish the project company within the prescribed time limit and sign a franchise agreement with the project company.