Why EPC projects can’t be done: F+EPC” means that the general contractor of the project undertakes the financing, design, procurement, and construction of the entire construction project, which means an additional financing task is added to the EPC basis. This is really a considerate service, yes

For a true "turnkey" project, the owner does not even need to raise funds in the early stage or prepare start-up funds. In fact, this model is a typical BT project, but from 2017 to 2019, the demand for infrastructure construction has increased.

The contradiction between the mismatch of government fiscal revenue and the single financing method is quite prominent, but BT cannot do it, and it coincides with the vigorous promotion of EPC, so everyone understands that it is just a matter of handing over the key, and you will pay after you get the key.

You know, the source of repayment is fiscal funds (for example, included in the budget, such as locking in land transfer income), but in essence it is an increase in government debt, but at least on the surface, it doesn't mean that you can understand it if you see through it without saying it, right?

A series of policies that have been introduced one after another have made it impossible for government investment projects to be "F+EPC". Specifically, look at the following items: 1. Local governments are strictly prohibited from borrowing money in the form of build-and-transfer (BT) or in disguise in the name of entrusted construction.

It is strictly prohibited to borrow money, use capital contracting to build government investment projects, and it is strictly prohibited to default on project payments. "Opinions of the Central Committee of the Communist Party of China and the State Council on Preventing and Resolving Hidden Debt Risks of Local Governments" (Zhongfa [2018] No. 27).

I write this in detail because I want to briefly talk about Document No. 27. In the past, when it came to government investment projects, there was a commonly known "three-piece package" of credit enhancement, which consisted of government commitments, financial guarantees, and National People's Congress resolutions.

"Accounts receivable" has also led to many related financial instruments. Why are they popular in the market? Because they are essentially government credit endorsements that actually enhance everyone's sense of security and gain. But things have changed since Document No. 27

, the government's debt is subject to strict total control and incremental supervision, and the government has also cut off new debt from platform companies. New investment and financing activities of platform companies no longer have government credit endorsement. 2. Except for the issuance of local governments.

Except for bonds and foreign debt-to-loans, local governments and their departments shall not provide guarantees in any way for the debts of any units or individuals; 3. Local governments and their departments shall not promise to use the expected revenue from the transfer of reserve land as a source of debt repayment for financing platform companies.

. Financing platform companies that only undertake the construction or operation of public welfare projects and mainly rely on fiscal funds to repay debts are not allowed to use the mortgage (pledge) of fiscal and state-owned assets as a source of debt repayment. 4. Local governments and their affiliated departments.

When participating in social capital cooperation projects, and participating in the establishment of various types of funds such as venture capital guidance funds and industrial investment guidance funds, you are not allowed to promise to repurchase the investment principal of other investors, bear the losses of the investment principal of guitar investors, or pay other investors

5. Local governments and their affiliated departments, public welfare institutions and people's organizations shall not violate laws and regulations and provide guarantees for the financing of financing platform companies in any form such as letters of guarantee, letters of commitment, letters of comfort, etc.