How to Select and Prepare PPP Projects in Different Areas
Guizhou China August 2018
Contents Questions
Question: What can Consultancies do for Q Case I: Hangzhou- PPPs? Shaoxing-Taizhou High-speed Rail PPP Project identification stage: project initiation, project identification, financial sustainability test, value for money Case B: The Construction of valuation Honghe River Tourism (First Phase) Project preparation stage: a comprehensive project implementation plan. Case C：Zhongdu Medical-Nursing Combined Project Project procurement stage: preparation of procurement documents, review of response documents, contract
Wrap-up negotiation and signing Project Profile Contents
Zhejiang Province： Case I: • Located in Southeast China, Yangtze River Delta Hangzhou- • Population in 2016 is 55.90 million Shaoxing- Taizhou High- • The most developed area in China, with GDP per speed Rail PPP capita 84,916 Yuan in 2016 (national GDP per Hangzhou capita is 53,980 Yuan at the same time) Shaoxing Case B: The Hangzhou, Shaoxing, Taizhou: Construction of • Political areas account for 33.7% of Zhejiang Honghe River • Population takes 36.24% share of total population Tourism (First Phase) in Zhejiang in 2016 • Total GDP is above 2 trillion in 2016, accounting for Taizhou Case C：Zhongdu 42.33% of Zhejiang GDP Medical-Nursing Major Econ & Tech Index: Combined Project • Rail length: 269km • No. of stations: 9 • Wrap-up • Max. speed: 350 km/h (220 mph) 3 • Total Investment: 44.89 billion Yuan 2018/9/17 Hangzhou-Shaoxing-Taizhou High-speed Rail Project Selection Contents
• A major transportation route to connect the Case I: Hangzhou-Shaoxing-Taizhou High-speed Yangtze River Delta metropolitan area with Hangzhou- Rail should run through PPP. Shaoxing- Taizhou & Wenzhou city cluster Taizhou High- • “Hangzhou-Shaoxing-Taizhou High- speed Rail PPP • An essential part of Zhejiang One-hour speed Rail…should be run through PPP Transport Circle, which helps improve the by Zhejiang Province, and (Zhejiang) Case B: The should positively attract private Construction of ground transportation network of Zhejiang companies to finance and build it Honghe River together.” Tourism (First • An important strategy to eliminate the last No- Phase) railway-city titles in Zhejiang • One of the “8 Private Capitals Invest Railways Example Projects”, including
Case C：Zhongdu Hangzhou-Shaoxing-Taizhou High-speed Medical-Nursing • A beneficial infrastructure to bring more Rail. Combined Project development opportunities for areas alongside the railway, especially tourism • Wrap-up
4 2018/9/17 Contents Deal Structure
The People’s Gov. of Delegate to Invest Case I: Rail Zhejiang Hangzhou- Passengers Province Pay Shaoxing- Delegate to execute Taizhou High- China Railway Co. Delegation Authority speed Rail PPP Delegate to Invest Zhejiang Select by bids Communication China Railway Private Investment Group Local Gov. Case B: The Development Partner(s) CO., LTD Representatives Construction of Fund Co., LTD Sign the PPP Honghe River 15% Share contract 51% Share 13.6% Share 20.4% Share Tourism (First Capital Base 12.36 billion Yuan Phase) (around 30% of the total investment)
Delegate to Run Loan Financial Case C：Zhongdu SPV Debt Entities Medical-Nursing Pay Combined Project Build-Own-Operate-Transfer (BOOT) Hangzhou-Shaoxing- Supervise • Wrap-up Supply Operating Services Relative Gov. Taizhou High-speed Sectors Rail 2018/9/17 5 Contents Milestones
Case I: Consulting teams officially Project bidding was Hangzhou- The SPV was set up Shaoxing- began to work successfully done Taizhou High- speed Rail PPP
Case B: The Construction of Honghe River 2016.6 2017.1 2017.5 2017.6 2017.9 2017.12 2018.3 Tourism (First Phase)
Consulting teams Gov. officially approved Gov. and the private Railway construction Case C：Zhongdu got in touch with the implementation partners signed the began Medical-Nursing relative Gov. plan PPP contract Combined Project sectors
• Wrap-up
2018/9/17 6 Contents Innovation Highlights
1. Push the revolution of current railway running machine Case I: Hangzhou- • Fully discover and mine the business attributes and income sources of high-speed rail projects. Shaoxing- Taizhou High- speed Rail PPP 2. Involved private capital into railway industry
Case B: The Construction of • SPV independently makes business decisions based on the market, and got revenues from tickets sales Honghe River and other relative business. Tourism (First • Local governments pay subsidies to SPV during the early running years Phase)
3. Build a dynamic payment & adjustment mechanism Case C：Zhongdu Medical-Nursing Combined Project • Adjustment mechanism works to handle specific changes, e.g. Extraordinary downside risk of demand/ passenger amounts • Break the current unreasonable patterns and mechanisms in railway industry, e.g. railway revenue and cost • Wrap-up clearing mechanism
2018/9/17 7 Contents Project Profile Location: South section of MiLe City, Honghe State, Yunnan
Case I: Hangzhou- Province Shaoxing-Taizhou High-speed Rail Population: The population is about 520 thousand of which PPP minority nationalities account for 43.6%. Economy: GDP 201.05 billion RMB, mainly in the secondary Case B: The industry Construction of
Honghe River Project Type: Travel & Leisure Tourism (First Project Content: Cultural Creation; Health Regimen; Watery Phase) Region Holiday; Travel & Leisure; Ecological Residence
Case C：Zhongdu Medical-Nursing Combined Project
• Wrap-up
2018/9/17 8 Contents Project Selection
Reasons for the Government's Selection of the Project Case I: Hangzhou- Requirements of Operational Shaoxing-Taizhou National Key Project Attributes of Tourism Industry Institution High-speed Rail PPP • One of the 135 great tourism • Flexible price adjustment • It is needed by professional projects of the National Tourism mechanism companies to operate tourism Case B: The Administration • High level of marketization projects. Construction of • One of the 150 urban complexes • Large scale of investment • It is needed by self financing of Honghe River in Yunnan Tourism (First private capital at the later stage • Key project of Kunyuhong tourism Phase) of the project. economic area
Case C：Zhongdu Project Preparation Medical-Nursing Combined Project Honghe state government attaches great importance to the project, a coordination group has been set up for the project. • Wrap-up Before the implementation of the project, the market tests were carried out in
several rounds to understand the intention of the private capital.
2018/9/17 9 Contents Deal Structure
Case I: Hangzhou- 1 Shaoxing-Taizhou Mile Government High-speed Rail Operation Model：BOT Grant the franchise right PPP Mile Bureau of housing and Mile Municipal urban rural development Case B: The Finance Bureau (Implementing Institution) 2 Construction of Handover when Select Total investment: 540 million Honghe River contract expired RMB Viability Gap Funding Selected Private Capital Tourism (First (The previous 11 years of - Project capital 140 million RMB Phase) operation stage） Responsible for investment, financing, - Debt capital 400 million RMB construction and operation Case C：Zhongdu The Construction of Medical-Nursing 3 Combined Project Honghe River Tourism (First Phase) The contract lasts 22 years Providing project Paying parking fee, advertising - 2 years for construction • Wrap-up financing support fee, visitor center rental fee, etc. - 20 years for operation Financial Institution User
2018/9/17 Contents Project Process
Preparatory PPP training was provided by the consulting agency for the project preparation Case I: Hangzhou- Shaoxing-Taizhou stage and unified operation. High-speed Rail PPP Conducted several interviews by different departments of Mile Public municipal government, and then a unified project plan was Sector Case B: The worked out. Construction of Identification Honghe River & Private Communicated with potential private capital repeatedly to Tourism (First Preparation Sector understand their corporation intention and interests. Phase) stage Visited Yunnan branch of China Development Bank several Financial times to identify the financing requirements and demonstrated Case C：Zhongdu Institution Medical-Nursing the feasibility of financing. Combined Project Private units were selected through competitive negotiation. Procurement • Wrap-up According to willingness of three sectors, they decided not to establish a Special & Implementation Purpose Vehicle. stage Two months after the PPP contract was signed, the project financing was completed 11 and obtained 400 million RMB of loan funds from China Development Bank. Contents Milestones
Case I: Hangzhou- Sep, signed a strategic Jul, the PPP Sep, selected into the Dec, received 150 Shaoxing-Taizhou cooperation agreement with contract was second batch of million RMB targeted High-speed Rail four luxury hotels and four signed demonstration projects construction fund PPP airline companies
Case B: The Construction of
Honghe River Tourism (First 2015.4 2015.7 2015.9 2015.12 2016.5 2016.9 2016.10 Phase)
Case C：Zhongdu Medical-Nursing Combined Project Apr, project team Sep, obtained a May, investigated by Oct, became the NO.1 started consulting 400 million RMB the major leaders of resort in the city of Mile, • Wrap-up service work loan from China Yunnan Provincial about 260 thousand tourists Development Bank Government during the weeklong National Day holiday 2018/9/17 12 Contents Innovation Highlights
Form the Synergistic Effect Decrease Government Innovation of Project Case I: Hangzhou- to Promote the Whole Value Financing Arrangement Shaoxing-Taizhou Subsidy High-speed Rail PPP
Case B: The Build underground PPP model operates Clear loan intention in Construction of parking lot advance Honghe River infrastructure to ensure
Tourism (First good project performance Phase) Provide advertising and Private capital operated Innovative loan leasing services commercial facilities by measures Case C：Zhongdu
Medical-Nursing themselves in order to Combined Project Encourage business enhance service quality Introduction of financial innovation • Wrap-up Lead to increasing tourist institutions supervision
flow
2018/9/17 13 Contents Project Profile
Location Case I: Hangzhou- Southwest of Shandong Province、North of Jining City Shaoxing-Taizhou High-speed Rail PPP Economy and Population A total population of 812 thousand, a GDP of 29 billion yuan and a General Public Budget Revenue of 1.36 billion Case B: The yuan in 2017 Construction of Characterisitcs Honghe River Traditional Agricultural County Tourism (First Phase) Millenary City of Buddha Wenshang County Land of Confucianism
Case C： Zhongdu Shandong Province Medical-Nursing Project Total Investment Combined 790 million yuan Project Project Output A new all-in-one community including 499 beds for health care and 1900 beds for elderly care Wrap-up Batch of Demonstration Projects The Third Batch of National PPP Demonstration Project Contents Project Selection
B. Demand Analysis A. Project Collection Case I: Hangzhou- Push forward as a key Shaoxing-Taizhou • The state council • The 12th and 13th 5- project High-speed Rail PPP Year Plan for Economic launched related Establish the PPP and Social Development of Wenshang County Project Leading Work Case B: The guiding opinions Construction of • Urban Comprehensive Group • Population aged 65 and Honghe River Planning of Wenshang Authorize the Wenshang Tourism (First Phase) County 2012-2030 over constantly （ ） Civil Affairs Bureau as increases implementation Case C： organization Zhongdu C. Screening D. Evaluation Medical-Nursing Organize the project promotion event Combined • In the field of public Project services • Pass the Value for Conduct the market test • Market Pricing Money and Financial Finish the Mechanism • Wrap-up • An investment of 790 Affordability Evaluation implementation plan million • Aging of Population boosts the demand Contents Deal Structure
Jincai State-owned Government of Authorize as Jiaxu Asset Assets Management Case I: Hangzhou- Wenshang County investor representative Management Co. Ltd Shaoxing-Taizhou Company Authorize as Invest 5% in cash Invest 95% in cash High-speed Rail PPP implementation orgainzation 20% of investment, equity investment Grant the 80% of Case B: The Wenshang Civil Affairs operation Special Purpose Vehicle investment, Debt Financial Institutions Construction of Bureau rights and financing Honghe River supervise Tourism (First Phase) Build-Own-Operate
Case C： Provide medical support Zhongdu Zhongdu Nursing Home Zhongdu Hospital（Non- Medical-Nursing （For-Profit） Profit） Combined Fund the operation Project Provide elderly care Operations & Maintenance
• Wrap-up User of health care and Provide health care Professional medical elderly care organization Contents Milestones
Case I: Hangzhou- Finished the VFM Evaluation, Shaoxing-Taizhou Be listed as one of the Adopted the PPP Financial Affordability High-speed Rail PPP third batch of National Model Assessment and Demonstration Projects Implementation Plan Case B: The Construction of Honghe River Tourism (First Phase) 2014年 2015 2016.1 2016.4 2016.8 2016.10 2019.9
Case C： Zhongdu Medical-Nursing Completed the Completed the Combined Project Project Planning bidding and signed construction and Project Incubation and Approval the contracts put into operation
• Wrap-up
2018/9/17 17 Contents Innovation Highlights
Let the professionals to do Fully exploit the business Case I: Hangzhou- the professional things value of the project Project Outcome Shaoxing-Taizhou High-speed Rail PPP Coordinated the interests of main Case B: The Feed the medical stakeholders Construction of service with the income Multiple ownership Honghe River of the pension service Tourism (First Phase) enterprises are Minimize the risk and Increase income from welcome to participate the input of public entertainment center, Case C： finance rental shops and Zhongdu parking space Medical-Nursing Entrust professional Increase the supply of Combined Limit the construction medical organization medical care and Project of similar projects in with the operation elderly care specific period and
• Wrap-up area Level up the efficiency of public services Contents Wrap-up
Case I: Hangzhou- Shaoxing-Taizhou How to leverage the expertise of High-speed Rail PPP your consultants
Case B: The Construction of Honghe River Attach importance to the VFM evaluation Tourism (First Phase)
Pay attention to the assessment of fiscal Case C：Zhongdu affordability Medical-Nursing Combined Project Make a comprehensive implementation plan Wrap-up
Work together on the performance management 专业· 尽责· 卓越 Thank You
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