May 31, 2010
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Guiding Opinions of the National Development and Reform Commission on Carrying out Public-Private-Partnership [Effective]
国家发展和改革委员会关于开展政府和社会资本合作的指导意见 [现行有效]
Guiding Opinions of the National Development and Reform Commission on Carrying out Public-Private-Partnership
(No. 2724 [2014] of the National Development and Reform Commission)
The development and reform commissions of all provinces, autonomous regions, municipalities directly under the Central Government, cities under separate state planning, and Xinjiang Production and Construction Corps:
To satisfy the relevant requirements of the Guiding Opinions of the State Council on Innovating the Investment and Financing Mechanism for the Key Fields and Encouraging Social Investment (No. 60 [2014], State Council) on encouraging and directing social investment, enhancing the capacity of supplying public products, promoting structural adjustment, making up short slabs, and benefiting people's livelihood, the following guiding opinions on carrying out Public-Private-Partnership (“PPP”) are hereby offered:


I. Fully understanding the significance of PPP
The PPP mode means a long-term benefit sharing and risk sharing partnership established by the government with social capital through franchising, purchase of services, equity cooperation, and other ways, to enhance capacity of supplying public products and services and to improve supply efficiency. Carrying out PPP is conducive to the innovation of the investment and financing mechanism, the broadening of social capital investment channels, and enhancement of endogenous economic growth power; helps promote mutual integration of various types of capital and make their respective advantages complementary to each other, promote the diversification of investors, and develop mixed-ownership economy; helps straighten out the relationship between the government and the market, accelerate the transformation of government functions, and maximize the decisive role of the market in allocation of resources.
II. Accurately grasping the main principles of PPP
(1) Transforming government functions and reasonably defining responsibility positioning of government. Carrying out PPP has put forward higher requirements for the transformation of government functions and improvement in management level. The government shall firmly establish the awareness of equality and the concept of cooperation, concentrate on effective completion of policy formulation, development planning, market supervision and guidance service, and transform from direct “provider” of public products to “cooperator” of social capital and “supervisor” of PPP projects.
(2) Adjusting measures to local conditions and establishing a reasonable mechanism of return on investment. Benefit expectation of social capital shall be stabilized by granting franchises, verifying standards of prices and fees, providing financial subsidies, and clarifying exclusive agreement, in light of the reality of various regions. In strengthening project cost monitoring, you shall not only fully mobilize the enthusiasm of social capital, but also prevent unreasonable surrendering of profits or transfer of benefits.
(3) Reasonably designing and building an effective risk-sharing mechanism. According to the principle of risk-benefit reciprocity, project risks shall be rationally allocated between the government and social capital. Generally, the risks of construction and operation of projects shall be assumed by social capital. Legal and policy adjustment risks shall be assumed by the government. Risks of natural disasters and other force majeure events shall be jointly assumed by both parties.
(4) Keeping faith and guaranteeing the lawful rights and interests of both parties. Project contracts shall be concluded on the basis of equal consultation, in compliance with laws and regulations, and in accordance with the principle of clear definition of rights and obligations, normalization and efficiency. The two parties to a contract shall firmly establish the legal awareness, contract consciousness and awareness of credit. The project contracts must be strictly enforced after signing. The breaching party without due causes must be held accountable.
(5) Improving the mechanism and creating an open and transparent policy environment. System design shall be improved from project selection, program review, determination of partners, price management, withdrawal mechanism, performance evaluation, and other respects, and a favorable policy environment shall be created to ensure scientific decision-making, standardized procedure, open process, clarified responsibilities, and steadily promotion for the implementation of the projects.
III. Reasonably determining the scope and mode of PPP projects
1. Applicable scope of the projects. PPP mode mainly applies to the public services and infrastructure projects for which the government assumes the responsibility of provision and which are also suitable for market operation. The PPP mode may be adopted for gas, power supply, water supply, heating, sewage and waste disposal and other municipal facilities, highways, railways, airports, urban rail transit and other transportation facilities, health care, tourism, education and training, health, pension and other public service projects, as well as water conservancy, resources and environment, and ecological protection projects. Priority shall be given to the PPP mode for the pilot programs of new municipal engineering projects and new-type urbanization projects across this country.
2. Selection of operation mode.
(1) Operational projects. The projects with clear basis for charges and operating charges capable of completely covering the investment costs may be promoted by Build-Operate-Transfer (“BOT”), Build-Own-Operate-Transfer (“BOOT”), and other modes, through the government's grant of franchise rights. The construction and operation market of relevant projects shall be opened according to the law, to actively promote the gradual implementation of franchising in the natural monopoly industries.
(2) Quasi-operational projects. The projects needing partial government subsidy of funds or resources due to insufficiency of their operating charges to cover the investment costs may be promoted by BOT, Build-Own-Operate (“BOO”), and other modes, through the government's grant of franchise rights, supplemented with some subsidies or equity participation with direct investment, and other measures. A collaborative mechanism shall be established for investment, subsidies and price, to actively create conditions for investors' obtaining reasonable returns.
(3) Non-operational projects. The projects mainly relying on “governments pay” to recover investment costs due to lack of the basis of “users pay” may be promoted by BOO, commissioned operation, and other market-oriented modes, through the government's purchase of services. The contents to be purchased shall be reasonably determined, to wisely utilize the limited funds and to earnestly improve fund application benefit.


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