How difficult is PPP landing and why PPP is sought after

First, many PPP projects do not share risks, but take risks unilaterally.

Second, there is no benefit sharing, and it is often investors who "share their interests". Third, there is rarely the concept of whole-process cooperation, many projects are three or five years at most seven or eight years after the completion of the project, ** will be responsible for repurchase; Some projects are to purchase services from PPP project companies, and determine in advance how much money to pay to PPP project companies each year, and this kind of project is almost risk-free.

Status: In a market economy, risk and return should be matched, low risk should be low return, high risk can have high return. Investment needs to bear risks, and some PPP projects** are responsible for repurchase or guaranteed returns, and PPP projects become low-risk or risk-free projects, but the rate of return is still very high.

Enterprises need to understand the form and future direction of PPP in China, and also need to understand how to implement PPP projects correctly, and the PPP training program of Peking University's PPP Financing Research Group can bring you the answers.

The difficulty in this project is whether the project is willing to push and pay money, and if it is willing to repurchase from the fixed profits of social capital, a lot of social capital will be involved. This method is relative to BT, but it only increases the repayment period. Just like our fund-raising housing may have to be fully paid in three installments, while the commercial housing loan can indeed reach more than 20 years.

In fact, it is to see if there is credit and whether it will be implemented in accordance with the agreement.

PPP model: In order to enhance the supply capacity of public products and services, establish a long-term operation model through franchising, purchase of services, equity cooperation, etc.

Model introduction: ** and social capital jointly set up a smart light pole project operation company, and during the project cooperation period, the project company is responsible for the investment and financing, construction, operation management and maintenance of the project.

Profit model: **The smart lamp operation and management company established with social capital carries out benefit distribution and cooperation in many forms such as franchising, purchase of value-added services, and equity cooperation.

Advantages and disadvantages analysis: the advantage is that it can effectively reduce the financial pressure of the current period; Give full play to the advantages of social capital, and effectively improve the efficiency of the construction and operation of smart light pole projects and the use of funds; Realize the integration of the construction and operation of smart light poles and city-related supporting facilities, and reasonably share project risks. The disadvantage is that there is a game of interests with social capital, and the first party needs to strengthen the supervision of the performance of the social capital party; In addition, the selection process of social capital is relatively complex, which requires high performance capabilities of both ** and social capital; The total static fiscal expenditure is relatively high; Multiple operating entities cannot achieve the optimal allocation of resources.

Taking the lighting public-private partnership model (PPP) as an example, this is a new model for the lighting project of urban municipal lighting facilities, which is a new model for achieving a win-win situation by cooperating with social capital through integrated energy efficiency upgrading and transformation to achieve smart city lighting and be responsible for a certain number of years of operation, that is, the smart city lighting PPP cooperative operation model. In the PPP cooperative operation mode of smart city lighting based on the smart lighting system of SEing high-voltage HID xenon street lamp as the carrier, the operation management company carries out daily operation and maintenance of the existing municipal lighting facilities in the contract area, and carries out smart city lighting upgrades, and gradually replaces the original municipal lighting infrastructure (light sources, electrical appliances, lamps, light poles, transformers, cables and distribution boxes, etc.), so as to realize the overall improvement of the overall municipal lighting effect in the jurisdiction. Urban lighting realizes intelligent management, and ensures the stable operation of the overall municipal road lighting facilities, and the road lighting effect meets the requirements of the "Urban Road Lighting Design Standards". **Concession of public lighting resources, supervision and purchase of lighting services; Invested by social capital, the operation and management company is the main body to upgrade the integrated system, long-term operation, subject to supervision, scientific management, and self-responsibility.

The private sector pursues the vital interests of the company, while the public sector is committed to the realization of public welfare and functional responsibilities. Only when both are moving towards the same goal can there be a basis for cooperation and thus achieve mutual benefit and win-win results.

1. Avoid cost overruns.

The involvement of private organizations in the infrastructure means that both parties are involved in the construction of the project and can play a supervisory role in each other. And the PPP model can only be used when the project is completed and approved, so that the private organization can obtain benefits. The PPP model is conducive to improving the efficiency of project construction and reducing the cost of project construction, and can also avoid the risk of project funds.

2. Reduce the financial burden.

3. Mutual benefit and win-win.

The PPP model can enable ** and private organizations to learn from each other's strengths, give full play to their respective advantages, and make up for each other's shortcomings. The two sides can form a mutually beneficial and win-win situation.

4. Reasonable risk allocation.

PPP realizes reasonable risk allocation in the early stage of the project, and shares a part of the risk. This reduces the risk for contractors and investors, and also reduces the difficulty of financing the project. It means that the investment risk of PPP project has the best to help share a little.

For the PPP model, the financial planner said that the rise of the PPP model is a matter of recent years, but this model is not yet mature, and there are many shortcomings, especially the research on the risk of PPP projects is not enough, how big is the risk of PPP, and what are the disadvantages of this model need to be further studied. Therefore, investors must be cautious in investing in PPP projects and cannot buy arbitrarily!

The PPP model is a public-private partnership model, which refers to the process of cooperation with the private sector, allowing the resources held by the non-public sector to participate in the provision of products and services, and bringing benefits to the private sector.

Economic and social development planning is inseparable from the development of infrastructure and public services. In accordance with the requirements of the first country, during the "14th Five-Year Plan" period, infrastructure and public services to make up for the shortcomings, strengths and weaknesses are still a major task facing China, and the PPP model is to use innovative ways and mechanisms to carry out extensive cooperation with social capital in the field of infrastructure and public services, and accelerate the pace of construction of infrastructure and public services in China, as well as the improvement of quality and efficiency.

Zhengxin Investment Group actively responds to the national PPP construction strategy, and since its establishment, it has provided PPP project investment and industry-city integration investment for many places. In Chongqing, Sichuan, Yunnan, Chengdu, Guangxi, Shandong, Guizhou, Shanxi and other provinces and cities, the group has reached cooperation with local governments, established relevant PPP project investment institutions and project companies, gradually carried out infrastructure construction and other project investment, and actively helped local governments to revitalize stock assets for infrastructure construction projects, which accelerated the prosperity and development of the local economy, improved the local employment rate, and led to the rebound of infrastructure construction demand.

The PPP policy is getting better and better

In order to further play the important role of PPP model transformation, promote the reform of the investment and financing system, and stimulate the vitality of social regret capital, establish a standardized, orderly, dynamic and sustainable project financial affordability management mechanism, and promote the high-quality development of PPP project implementation and financial management, China has issued many PPP project management related policies in recent years, and the construction of PPP policy system is becoming more and more perfect.

The development of PPP projects has gradually stabilized

According to the data of the PPP Center of the Ministry of Finance, as of January 2022, the total number of PPP management projects in China's PPP management library has reached 10,254, and the investment amount has reached one trillion yuan. However, from the perspective of the overall growth trend of projects, the overall growth of PPP projects in China has slowed down, and the market development has gradually stabilized, entering the stage of digesting stocks.

At the same time, the growth rate of net investment in PPP landing and start-up projects also showed an overall trend of first increasing and then declining. According to the data of the PPP Center of the Ministry of Finance, in 2018, the growth rate of net investment in PPP landing and construction projects reached the highest value, and after 2018, the growth rate of net investment began to decline significantly.

The growth of PPP project companies has slowed down

As of 2021, a total of 13,784 full-caliber PPP projects in China have been transacted, of which a total of 10,772 projects have established project companies.

The number of PPP winning bids is gradually decreasing

From the perspective of PPP project bidding, from 2017 to 2021, the number of transactions and the transaction scale of China's full-caliber PPP projects showed an overall trend of first increasing and then declining, reaching a peak in 2017. In 2021, a total of 1,019 full-caliber PPP projects were transacted in China, with a total investment of one trillion yuan.

— The above data refer to the Prospective Industry Research InstituteAnalysis Report on the Operation of PPP Model and Investment Strategic Planning of China Cavity Douguo

PPP (public-private-partemership), that is, the cooperation model between the public sector and private enterprises, refers to the form of mutual cooperation between profit-making enterprises and non-profit-making enterprises or organizations based on a certain project, and is a project financing model for public infrastructure. Under this model, profit-making enterprises and non-profit-making enterprises or organizations form a win-win cooperation model to maximize the total income and achieve the optimal Pala, that is, to maximize the social benefits, which is more in line with the purpose of public infrastructure construction.

In the process of project implementation, lead the selection of the project company and the establishment of the project, participate in the establishment of the project company, preside over the bidding, cooperate with the enterprise to complete the project financing, and mainly play a supervisory role in the project construction and operation management, and finally receive the project and carry out the project handover. Compared with the functions and roles of the traditional infrastructure model, the functions and roles under the PPP model have the following characteristics: firstly, from the perspective of funds, the traditional model mainly relies on fiscal expenditure, while the PPP model absorbs social funds; Secondly, from the perspective of risk sharing, the traditional model bears almost all the risks, while the PPP model shares part of the risks. Thirdly, from the perspective of income, the traditional model has no or only a small amount of income, while the PPP model or project facilities; Finally, from the perspective of the roles played, the traditional model** plays the role of decision-makers and investors, while the PPP model plays the role of collaborator and supervisor.

It can be seen that under the PPP model, the role of the company has changed from decision-makers and investors to partners and supervisors, expanded project funds, improved operational efficiency, and ultimately accelerated infrastructure construction.

Minsheng ** pointed out that considering the pressure of population and inventory, the growth rate of real estate investment will continue to decline; The terminal demand of the manufacturing industry is insufficient, the overcapacity has not been cleared, and the manufacturing investment industry will continue to decline; Commercial banks' risk appetite has fallen, and they are reluctant to lend to the private sector, and the financing cost is high, and it is difficult for the private sector to have the motivation for capital expenditure. If we want to stabilize investment, we can only rely on infrastructure investment.