Since the Ministry of Finance promulgated the "Implementation Opinions on Promoting the Standardized Development of Cooperation between Government and Social Capital" (Caijin [2019] No. 10) on March 7, 2019, many big names in the PPP industry have published a lot of opinions on the No. 10 document.

Articles have different or even contradictory views.

If it is an exchange of academic opinions alone, it is good to have a hundred schools of thought contend. However, as Document No. 10, which will play a major practical role in guiding PPP, it is an operation manual rather than an academic paper. The content of the rules must be clear and understandable.

Otherwise, it may once again cause society to be confused and helpless about PPP.

It is precisely based on this and in an attitude of being responsible for others and ourselves that we feel it is necessary to re-interpret some key issues in Document No. 10.

We cannot guarantee how correct our views are, but we strive to be objective. We also hope to spark some discussion, and ultimately the legislators will set the record straight.

Let PPP rules guide the progress of PPP in a clear, pragmatic and easy-to-understand manner.

1. Standardized PPP projects should meet the following conditions: 1. It is a public welfare project in the field of public services. In principle, the cooperation period is more than 10 years, and the value for money evaluation and financial affordability demonstration procedures are performed in accordance with regulations; Understand

Clear, no interpretation required.

2. Social capital is responsible for project investment, construction, operation and bears corresponding risks, while the government bears policy, legal and other risks.

Interpretation A. There have always been different views on the risk allocation of many PPP projects, especially when it comes to policy, legal and other issues. Many governments have subdivided policy and legal risks in risk allocation: (1) For the issues promulgated by the government at the same level

Policies, regulations, etc., because the government itself is controllable, therefore, the risks are borne by the government; (2) As for the policies, regulations, etc. risks promulgated by the higher-level government, because the government at the same level does not have control and predictability, it is regarded as the same

In case of force majeure, the costs will be shared by both parties.

This division often causes disputes between the government and social capital in practice.

The provisions of this opinion should be understood to be that as long as the policy and legal risks are borne by the government, it plays an important guiding role in the reasonable allocation of risks, whether for the current level or the superior level.

However, if some governments are worried about their own changes in the next ten years and force social capital parties to voluntarily bear the policy and legal risks of their own governments, is this a non-compliant PPP?

I hope the legislators can make it clearer.

3. Establish a payment mechanism that is completely linked to project output and performance, and do not lock in and solidify government expenditure responsibilities in advance by lowering assessment standards; Interpretation B Assessment standards are good, and legislative intentions are certainly worthy of promotion.

However, this simple rule expression is difficult to operate in practice.

The "assessment standards" themselves do not have a relatively clear definition, so it is impossible to determine what "lowering" means.

In practice, especially in operating projects such as cultural tourism, elderly care, health, and sports, each operator may have its own unique operating model and content, lacking universal regularity, and it is difficult to set assessment standards (this is inconsistent with

There are obvious differences between sewage treatment, garbage treatment, infrastructure construction, etc.). Most of the above-mentioned operation projects currently on the market are designed with reference to the concept of "operation and maintenance" of government-paid projects, rather than the concept of "operation".

Set assessment standards, at best add some simple performance assessment standards such as "consumer complaints" and "safety".

This is obviously an attempt by the social capital to reduce the risk of failing performance appraisals.

Therefore, it is actually difficult to identify “lowering assessment standards”.

So, this provision is actually almost useless.

4. The project capital shall comply with the proportion stipulated by the state, and the shareholders of the project company shall pay the capital in full and on time with their own funds; Interpretation C This article is very important.

There is no need to say much about the identification of shareholders. However, PPP projects last for more than 10 years and the investment amount is very large. Many social capital parties cannot bear the return on investment in such a long period.