PPP (Public-Private Partnership), also known as PPP model, i.e. government-social capital cooperation, is a project operation model in public *** infrastructure. Under this model, private enterprises and private capital are encouraged to cooperate with the government and participate in the construction of public **** infrastructure.
The engineering PPP model is an optimized project financing and implementation model, with "win-win" or "multi-win" for each participant as the basic concept of cooperation, and its typical structure is as follows: a special-purpose company formed by a government department or a local government through the form of government procurement and the winning bidder, and a special-purpose company formed by the government department or the local government through the form of government procurement and the winning bidder. The typical structure is that a government department or local government, through government procurement, signs a concession contract with a special purpose vehicle (SPV) formed by the winning bidder (the SPV is usually a joint-stock company consisting of the winning construction company, service provider or third party investing in the project), and the SPV is responsible for the financing, construction and operation of the project. The government usually enters into a direct agreement with the financial institution providing the loan, which is not an agreement to guarantee the project, but rather an agreement promising the lending institution that it will pay the relevant fees under the contract with the SPV, and which enables the SPV to obtain loans from the financial institution relatively smoothly.
Model characteristics of PPP
First, PPP is a new type of project financing model.PPP financing is a project-based financing activity, a form of project financing realization, mainly based on the project's expected returns, assets, and the strength of the government's support rather than the creditworthiness of the project investor or sponsor to arrange financing. The direct returns of project operation and the benefits transformed through government support are the source of funds for loan repayment, and the assets of the project company and the limited commitment given by the government are the security guarantee for the loan.
Secondly, the PPP financing model can enable more private capital to participate in the project to improve efficiency and reduce risk. This is exactly what the current project financing model encourages. The government's public *** department and private enterprises cooperate in the whole process based on the concession agreement, and both parties *** together are responsible for the whole cycle of project operation.The operation rules of PPP financing model enable private enterprises to participate in the preliminary work of urban rail transit project such as confirmation, design and feasibility study, which not only reduces the investment risk of private enterprises, but also can introduce the management methods and This not only reduces the investment risk of private enterprises, but also introduces the management method and technology of private enterprises into the project, and also effectively realizes the control of project construction and operation, which is conducive to reducing the risk of project construction and investment, and better protects the interests of the state and private enterprises. This is to shorten the project construction cycle, reduce the project operating costs and even the gearing ratio are worthy of recognition of the practical significance.
Third, the PPP model can to some extent ensure that private capital "profitable". The private sector's investment goal is to seek both loan repayment and return on investment projects, unprofitable infrastructure projects are not able to attract private capital investment. By adopting the PPP model, the government can compensate private investors with corresponding policy support, such as tax incentives, loan guarantees, and priority land development rights along the route for private enterprises. Through the implementation of these policies can improve the enthusiasm of private capital investment in urban rail transit projects.
Fourth, the PPP model improves the quality of urban rail transportation services under the premise of reducing the burden and risk of the government's initial construction investment. Under the PPP model, the public *** department and private enterprises *** participate in the construction and operation of urban rail transit together, and private enterprises are responsible for project financing, which is likely to increase the amount of capital for the project and thus reduce the gearing ratio, which not only saves the government's investment, but also transfers a part of the project's risk to the private enterprises, thus alleviating the government's risk. At the same time both sides can form a mutually beneficial long-term goal to better serve the community and the public.
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