Under the background of increasingly strict debt supervision of local governments, some places try to solve the project financing problem with the mode of "EPC+F". Can this model be combined with PPP? Can compliance be achieved in the implementation process?
recently, at the PPP salon of "compliance of EPC+F model and its relationship with PPP model" held by China academy of fiscal science, relevant experts exchanged views on this.
it is understood that "EPC+F" mode is a cooperative mode in which the government or the project owner authorized by the government is responsible for selecting the investment builder, and the investment builder is responsible for project design, procurement, construction and fund-raising or assisting in project financing. After the project is completed, the project owner will repay the debt according to the contract. As a construction method, compared with traditional project bidding, EPC has advantages in the derivation of service chain and the richness of service connotation. In some areas, EPC is combined with investment and financing to form "EPC+F" mode.
Jin Hao, an expert in PPP expert database of the National Development and Reform Commission and deputy general manager of China Construction Fund Corporation, believes that the "EPC+F" model is simply the project general contracting plus investment and financing.
Gao Yali, a PPP dual-database expert from the Ministry of Finance and the National Development and Reform Commission, and a master tutor from Beijing National Accounting Institute, believes that EPC is a turnkey project, that is, design, procurement, construction and turnkey. The project cost of this model includes project cost, financing cost and project profit. The owner (government) will contract the project to the construction party, and the owner will pay the money to the construction party according to the project schedule, and the construction party will not make advance payment during the construction period, and the project will be handed over to the government after completion. This model belongs to the government's purchase of services, that is, the budget is first arranged and then the expenditure is arranged. EPC mode integrates design, procurement and construction to avoid multi-head coordination, which can shorten the project cycle compared with PPP mode; This model can adopt multi-path financing such as financial leasing and export credit for materials and equipment. However, the "EPC+ financing" model is actually "BT-like", which has no operational content, bypasses the standardized PPP operation process, and does not quantitatively measure and demonstrate the value for money and financial tolerance, which will easily lead to hidden debts of local governments.
when it comes to the relationship between "EPC+F" mode and PPP, experts attending the meeting believe that PPP+EPC mode usually refers to projects built and operated by PPP mode, and government departments determine the project contractor (EPC) while selecting social investors, thus avoiding "secondary bidding" for project construction.
According to industry analysts, under the PPP project, social capital will adopt the "EPC+F" model, which belongs to the subcontracting of social capital within the responsibility. If the government agrees, this practice will be in line with the regulations. At the same time, it should be noted that "EPC+F" mode can not be juxtaposed with PPP. If there is no problem under PPP contract, it is an advance payment to implement it alone.
Professor Wen Laicheng, an expert in PPP expert database of the Ministry of Finance and the Central University of Finance and Economics, believes that the "EPC+F" model has gradually become an important means for some local governments to promote infrastructure construction, but the risks involved cannot be ignored. The financial department has clearly standardized the business process and implementation purpose of PPP model, including project identification, preparation, procurement, implementation and handover; The main purpose is to improve the quality of public service, improve the investment benefit and enhance the public's satisfaction and happiness in public products and services.
is the "EPC+f" model compliant in PPP projects?
Peng Cheng, director of the PPP Research Institute of China Academy of Fiscal Science and an expert in the PPP expert database of the National Development and Reform Commission, believes that the recent widespread use of "EPC+F" is mainly due to the following reasons:
First, since the PPP field entered the stage of clean-up and rectification at the end of last year, all sectors of society have some doubts and puzzles about the PPP model, which has provided opportunities for the rapid development of "EPC+F".
second, compared with the PPP promotion process with complicated procedures and strict management, the operation of "EPC+F" mode is relatively simple, which can better meet the requirements of local governments and contractors for implementation efficiency and short-term performance.
Third, the "EPC+F" model can help local governments to raise funds and solve practical problems when their financial rights and powers are not matched.
fourthly, some local governments and enterprises blindly pursue the "EPC+ F" model widely used in international engineering project.
therefore, if the government financing behavior under "EPC+F" mode is included in budget management, it can be considered as a compliance mode, otherwise it is suspected of illegal borrowing.
experts attending the meeting believe that the standardized PPP process to promote the "EPC+F" model can effectively solve the financing problem in the project construction process, and will not form local government debt. However, the irregular "EPC+F" is likely to become a BT-like project. If the local government is required to pay the project funds and financing costs year by year, it is essentially a disguised government debt.
of course, to judge whether "EPC+F" is in compliance in the specific application process, we must make a comprehensive judgment from the aspects of project category, bidding (financing) subject, repayment source, etc., and we cannot simply draw a conclusion across the board.