The English full name of PPP mode is Public-Private-Partnership, which can be divided into broad sense and narrow sense. In a broad sense, PPP refers to various cooperative relationships established between the public sector and the private sector to provide public goods or services, which can be divided into three categories: outsourcing is invested by the government, and the private sector contracts one or more functions in the whole project, and realizes income through government payment; Franchising requires private participation in part or all of the investment, and sharing the project risks and benefits with the public sector through certain cooperation mechanisms; Privatization requires the private sector to be responsible for all the investment of the project, and under the supervision of the government, the investment can be recovered by charging users for profit.
In a narrow sense, PPP refers to the formation of a special purpose agency (SPV) between the government and the private sector. Its principle is similar to BOT, but it emphasizes the whole process of public-private cooperation. At present, the narrow PPP model is promoted by the government. Compared with generalized PPP, the cooperation between government and enterprises in narrow PPP mode is closer and deeper, and the information is more symmetrical. A project company composed of government and social capital signs a franchise contract with the government for a specific project, and the project company is responsible for project design, financing, construction and operation. After the franchise expires, the project company will terminate and hand over the project to the government. The narrow PPP model was first born in Britain, and its application scope is very wide, including economic infrastructure projects such as roads and railways, as well as social infrastructure projects such as hospitals and schools.
(The first project of PPP mode is the Beijing Metro Line 4 project.
In China, the broad PPP model can be traced back to1980s, and the narrow PPP model was born in 2004, but its application scope became wider and wider in recent years. As early as the 1980s, China began to introduce the PPP model in the field of infrastructure. The project mainly appeared in the form of BOT, and its development reached a low point after the Asian financial crisis 1997. After 2003, the PPP model began to recover, but the launch of "4 trillion" made most local governments give priority to debt financing to complete the project construction; After 20 10, with the exposure of local debt problems, the PPP model was re-valued by the government. As far as narrow sense PPP is concerned, strictly speaking, the first domestic project is the Beijing Metro Line 4 project in 2004. Part B of this project, 4.7 billion yuan, will be borne by MTR, Beijing Investment Corporation and Beijing-Hong Kong Metro Corporation, the first franchise company established, of which MTR accounts for 49%, Beijing Investment Corporation accounts for 49% and Beijing Investment Corporation accounts for 2%.
(B) PPP model failure reasons for the failure of public-private partnership projects
The reason why the narrow PPP model has not developed rapidly is that the failure of some public-private partnership projects has led to the cooling of PPP projects, and the cooperation mechanism, supporting system and local government investment and financing model are also very important. First of all, the government department is in a stronger position than the private sector, and the decision-making power and management power of the private sector in project operation and supervision cannot be effectively guaranteed; Secondly, the current PPP model has no suitable exit mechanism, which also hinders investors' investment enthusiasm; Thirdly, the relevant supporting policies are not perfect, there are no laws and regulations specifically for PPP mode, and there is no special PPP management organization; Finally, in the past few years, the mainstream investment and financing mode of local governments is debt financing+land finance, and the demand for PPP mode is relatively small.
(C) PPP model is conducive to reducing the debt risk of local governments
Eliminate financial soft constraints and standardize local debt. At present, the soft constraint of local finance is that local governments do not consider their own fiscal revenue when borrowing debts, and always hope to solve the current debt payment problem by borrowing new and returning old or the assistance of higher-level governments, which eventually leads to excessive local government debts and a rapid increase in the scale of local debts nationwide. After the popularization of PPP model in the future, local governments and private sectors will fully bear the risks and benefits of project investment, and the scale of government investment in the project will be clear from the beginning, and the government's fiscal expenditure will gradually become transparent. In addition, the entry of the private sector can speed up the construction process of the project, improve the investment efficiency, improve the operation and management level of the project, and then promote the matching of local government expenditure and income. The elimination of financial soft constraints will make local debt develop in the direction of standardization.
Attract the participation of private capital and reduce the pressure of local government investment and expenditure. One of the main reasons for the rapid growth of local debt is that the pressure of government departments' investment and expenditure is too high, and the initial cash flow creation ability of most projects is insufficient. Local governments have to rely on excessive debt to finance projects and repay old debts. PPP mode can solve this problem well. Because infrastructure projects usually have the characteristics of large investment and long construction time, the initial investment and income are far from proportional. This maturity mismatch is entirely borne by the government and becomes excessive debt financing, and it is even more impossible for the private sector to fully bear it. Therefore, local governments give subsidies to the private sector in a certain period of time to ensure that participants in the PPP model can get a reasonable return on investment. According to the survey of the World Bank, in the existing PPP projects, 39% of private sector income comes from government agreement payment, 34% comes from user payment, and 23% comes from various government subsidies such as tax incentives. It can be seen that most of the income of PPP projects still comes from the government, but the debts in the balance sheet are converted into expenditures in the income statement and cash flow statement, and the obligation period is extended, which solves the problem of maturity mismatch to some extent.
(D) The future cash flow of PPP model is predictable.
The future cash flow of PPP projects is predictable, which is beneficial to the pricing of related financing instruments. From the implementation of Guangzhou Power Plant Waste Incineration Power Generation Project and Shantou Binhai New City Project financed by "14 Guangzhou Thermal Power Debt", it can be seen that in the early stage of PPP project, public and private departments need to coordinate and communicate, establish a complete contract system and clarify their respective division of labor. For example, Shantou Binhai New City Project, the government mainly provides legal support for resources, policies and operations, as well as administrative cooperation, and the financing, planning, construction and operation of the project are completed by enterprises; At the same time, it is necessary to form a detailed project plan and predict future operating income. For example, the garbage incineration power generation project of Guangzhou Power Plant is expected to be put into operation in the second quarter of 20 16, with an annual income of 260 million yuan during the operation period. On this basis, enterprises raise funds by issuing project bonds or other forms, and then complete the construction and operation of the project. Because the PPP model requires careful coordination between the public sector and the private sector and early project planning, the future cash flow can be controlled, which makes the financing pricing of PPP projects more transparent.
(E) the impact of promoting the PPP model on the bond market
On the one hand, it is conducive to reducing the debt pressure of local governments and controlling the risk of debt investment in existing cities within a controllable range; On the other hand, it will provide new mainstream varieties for the bond market and have obvious investment value. The popularization of PPP model can reduce the pressure of local government debt and reduce the incremental demand of local government debt; In addition, the promotion of PPP model has given the city investment platform whose debt is not classified as government debt a good opportunity to transform, so that the debt risk of the city investment platform without implicit government guarantee can transition smoothly and will not get out of control in the short term. Due to the huge demand for issuance, the project income bonds under PPP mode will undoubtedly become a new investment variety in the bond market. These projects have clear franchise transfer, stable cash flow and necessary government subsidies. The main feature of bond issuance is "project orientation", and the issuer's credit qualification will not be the decisive factor affecting bond pricing. In addition, because the issuer of the project income bonds is not the local government, its issuance interest rate will be significantly higher than that of local government bonds, and the nature of the project determines that the bond repayment source is very stable, the risk is relatively controllable, and it has obvious investment value.
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