PPP mode is Public-Private-Partnership acronym means between the government and private organizations, is to provide some public goods and services to the concession agreement, based on the formation of a partnership-based cooperation between each other, and by signing a contract to define the rights and obligations of both parties, in order to ensure the successful completion of cooperation, cooperation between the parties eventually reached a more favorable result than expected to act alone.
Public-private partnership model (PPP), its government involvement in the whole process of operating characteristics attracted widespread attention at home and abroad. PPP mode will be part of government responsibility to franchise the way the body transferred to the community (businesses), government and social subjects establish a "benefit sharing, risk sharing, full cooperation" of community relations, to alleviate the financial burden of the Government, the investment of social subjects the risk is reduced. PPP mode is more suitable for the public welfare strong waste disposal or among certain sectors, such as hazardous waste disposal and garbage incineration and landfill disposal links. This model requires a reasonable choice of cooperation projects and to consider the form of government participation, program, channel, scope and extent, it is worth exploring and troubling questions
The main advantage is that the PPP will be the introduction of market mechanisms of investment and financing infrastructure. Not all urban infrastructure projects can all be commercialized, it should be said that most of the infrastructure is not commercially oriented. Government can not believe that, through market mechanisms for infrastructure projects mean that the Government withdraw from all areas of investment. In the infrastructure market, the Government will have to continue to put some infrastructure funds. For the government, investment in PPP projects is less than the traditional way of investment, the difference between the two is the use of government revenue PPP mode.
(1) the elimination of the cost over-runs. Project to identify public and private enterprises to participate in the initial stages of the private sector and government projects, feasibility studies, facility and financing process to ensure the feasibility of the project on a technical and economic cycles shorten the preliminary work to make the project cost lower. PPP mode only when the project has been completed and approved after the government, the private sector can begin to reap the benefits, so the PPP model will help improve efficiency and reduce the project cost, to eliminate the project completion risk and financial risk. Studies have shown that, compared with the traditional financing model, PPP projects average savings of 17 percent of the costs for the government, and the construction period can be completed on time.
(2) in favor of the transformation of government functions, reduce the financial burden. Governments can get away from the heavy transaction out, from past infrastructure provider of public services into a regulatory role, so as to ensure the quality, but also can reduce the pressure on the government in terms of budget.
(3) to promote the diversification of investors. The use of the private sector to provide assets and services to provide more funds and skills for government departments to promote the investment and financing system. Meanwhile, the private sector involved in the project can promote innovation in project design, construction and facility management processes, etc., to improve efficiency and dissemination of best management ideas and experience.
(4) The Government and private sectors can learn from each other, play the government public institutions and private organizations in their respective strengths, compensate for the lack of the other body. The two sides can form mutually beneficial long-term goals, it can be the most cost-effective high-quality services to the public.
(5) integration of the parties involved to make the project a strategic alliance to coordinate all the different interest objectives plays a key role.
(6) a reasonable allocation of risk. BOT and other models with different, PPP projects will be realized at the beginning of the allocation of risk, and because the government a share of the risk, the risk of a more rational distribution, reducing the risk of contractors and investors, thereby reducing the difficulty of financing, improving the success of the project financing possibility. Government risk-sharing but also have some control over.
(7) The wide range of applications, the pattern broke through the introduction of private sector participation in public infrastructure projects, the organization of a variety of restrictions, applicable to urban heating and other municipal utilities and roads, railways, airports, hospitals, schools, etc.
In developed countries, PPP wide range of applications, both for investment in infrastructure (such as water, power plant), can also be used to build a lot of non-profit facilities (such as prisons, schools, etc.). Beijing is preparing to build six Olympic venues by legal tender, we believe that PPP is an excellent way. Olympic venues is difficult to rely on their own balanced funds, the need for government to invest in an appropriate manner, in order to make the project commercially operational. Likewise, Beijing is preparing a large-scale construction of urban railways, PPP is also the most effective way.
PPP model is widely used in various engineering PPP model has been widely used. China to promote the privatization of infrastructure projects. PPP model introduced in China in the field of infrastructure construction, has extremely important practical value. The Chinese government also began to realize that these important values, and support for the PPP mode provides some level of national policies and laws to support the level of development in China.
