New incentive policy for Shanxi PPPs

By Wang Jihong and Liu Ying, Zhong Lun Law Firm

Compared with the vigorous growth of PPP (public-private partnership) projects across the country, there are only 31 PPP projects recorded in Shanxi province with a total investment of about RMB51.7 billion (US$7.7 billion). In order to change this situation of the slow development of PPP projects, the Shanxi government recently introduced Several Policies and Measures for Accelerating Public-Private Partnerships (circular No. 35), which specified a series of policies and measures to accelerate PPP projects.

Wang Jihong, Partner, Zhong Lun Law Firm
Wang Jihong
Zhong Lun Law Firm

PPP model must be given priority. Shanxi actively encourages the adoption of PPP models in new projects, and transforming existing projects into PPPs. Circular No. 35 specifies that PPP models must be given priority in new key projects in Shanxi, including: highways, railways, airports, urban rail transit and other transportation facilities; gas, power supply, water supply, heat supply, sewage and waste disposal, and other municipal infrastructure; and energy, resource/environment/ecology protection, agriculture, forestry, water conservancy, science and technology, affordable housing, healthcare, hygiene, pension, education, sports, culture, tourism, etc. The priorities cover various projects in more than 25 fields.

For existing projects, the adoption of transfer-operate-transfer (TOT), rehabilitate-operate-transfer (ROT) and other models are encouraged to transfer existing projects into PPP projects and guide social capital to participate in reconstruction and operation. Subject to creditor consent, the transfer of government debt into non-government debt, so relieving local government debt burdens, is also encouraged.

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Wang Jihong is a partner and Liu Ying is an associate at Zhong Lun Law Firm

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