“一带一路”：PPP模式如何发挥作用？
2017-12-27
“一带一路”速览
a.陆地和海上通道
b.60多个国家、三个大洲
c.以6个交通走廊为中心
d. 涉及全球65%的人口和35%的GDP
e.目标包括减少贸易壁垒、推进设施和人口的互联、金融一体化和政策协调
作为中国政府的一项重要战略，“一带一路”战略谋求恢复中国连接亚洲、欧洲和非洲的传统贸易路线，促进沿线60多个国家、覆盖全球三分之二人口和三分之一GDP区域的经济活动和联系。
中国在不同的“一带一路”国家的投资很可能会以不同形式进行。本文着重介绍为何政府和社会资本合作（PPP）模式在“一带一路”沿线国家的基础设施项目中能够发挥核心作用，并列出在“一带一路”战略中成功实施PPP模式应具备的条件。
PPP模式可为中国和“一带一路”沿线国家提供独一无二的在降低政府财政负担的基础上发展基础设施项目的机遇。在为“一带一路”沿线国家当地私营领域创造长期发展平台的同时，该模式可以确保东道国政府“投入”项目和项目可靠性，为中国出口专业技术、商品和服务提供渠道。
为项目选择PPP模式
如前所述，为实现中国作为“一带一路”发起国、其他东道国政府以及其他市场参与方（包括股权投资人、融资方和承包商）的目标，根据相关行业的经营和战略重要性，PPP的执行方式可能是多种多样的。PPP不是一个“一刀切”的模式。例如，如主要目标是通过吸引社会资本来降低政府财政负担（这是英国PPP模式的主要驱动因素），则BOT/BOO模式比简单的服务合同模式更好，因为服务合同模式下资本投入仍然是公共机构的责任。如主要目标是转移风险，则特许权模式可能是更合适的选择，澳大利亚多个收费公路项目都采用了这一模式。但是，如东道国政府希望保持对服务或资产的控制权或每隔几年可以对私营机构重新评估或重新进行安排，则服务/管理合同或租赁安排可能是更合适的选择。
为满足政府在项目实施中对透明度越来越高的要求，成熟PPP市场越来越多地采用合资公司模式。在“一带一路”背景下，合资公司可作为中国的替代投资方式，该模式同时可降低对东道国政府信用的顾虑，可以鼓励有意与中国知名企业共同投资的第三方股权投资人（无论是来自中国还是其他国家）参与项目。
东道国政府和双边投资协定的作用
PPP模式的共性是社会资本参与方与出让服务/管理合同或授予BOT或特许权的政府机关共同发挥重要作用。如政府机关或东道国政府为获得项目股权设立合资公司，则又增添了一层含义。
虽然中国是“一带一路”战略的总发起人，但在“一带一路”沿线国家实施PPP项目仍需要东道国政府的相关机构积极参与，包括负责为东道国政府筹集向私营机构付款资金的财政部。PPP模式的“合作”因素也因此在“一带一路”战略中具有更广的含义，包括中国与相关东道国政府以及相关东道国政府机关与合作的私营机构之间的关系。我们将在下文“东道国政府的投入和可靠性”章节进一步阐述。
为确保东道国政府合作和积极参与，中国政府在双边投资协定方面已经取得了显著进展。确保上述协定适应“一带一路”战略的宽度和广度对各方都大有裨益。
适用不同资产类型的PPP模式
PPP模式已运用于世界范围内的多种类型项目，包括道路、桥梁、隧道、铁路、港口、机场和宽带服务等经济基础设施，也包括社会保障住房、学校、医院、监狱、水务、废物处理和国防设施等社会/公共基础设施。在一定程度上，在上述领域实施PPP模式是自我选择的结果：租赁合同和特许权模式在吸引特定用户付款的经济基础设施（如港口、机场和收费公路）中更易实施，而服务/管理合同和各种形式的BOT安排在更广泛的经济和社会领域中可以得到运用。
如上文所述，具体项目的合同安排可根据中国、相关东道国政府和社会资本的要求进行相应调整。
PPP的优点
1.降低财政负担
（1）使用社会资本
无论项目资金成本的大小，吸引社会资本投资都可以降低中国和/或东道国政府的资金承诺，并刺激商业债务市场的资金供应。虽然上述优点在BOT或特许权PPP模式中最为明显（可以促使社会资本提供大额的初期开发费用），服务/管理合同或租赁安排也可以释放流动资金、确保服务的成本确定性，从而协助东道国政府对预算的管理。
通过(a)吸引社会资本；以及(b)向东道国政府转移大部分资金负担（如根据服务/管理合同或BOT模式，东道国政府将负责向私营机构支付提供相关服务的费用），中国规模巨大的“一带一路”投资可以通过PPP模式得以深化。
长远来看，利用社会资本还可以推动东道国金融市场的发展。
（2）社会资本规律
利用社会资本的优点不仅在于可以提供资金。外部融资方的参与可能会创造良好的合同结构，以确保(a)按时、按预算和按标准交付相关基础设施；以及(b)项目良好运营、严格的尽职调查以及在项目期内信息提供的及时性。私人债权和股权融资人推动PPP顺利完成的动机将其利益与中国和“一带一路”合作伙伴的利益统一起来。
（3）东道国信用状况
由于很多“一带一路”国家是发展中的经济体，对社会资本及其融资方来说东道国政府的信用状况可能是一个问题。通过在合同期内分摊东道国政府的付款义务，PPP模式一定程度上缓解了这一问题。中国还可能可以提供担保或其它信用支持，进一步降低社会资本投资“一带一路”国家的障碍。
通过提供信用支持和保险产品、设立项目结构份额，多边金融机构在协助东道国政府以对社会资本而言可融资/可投资的方式实施项目，进而管理发展中国家的风险方面一直很活跃。中国也可以采用类似方式，例如通过亚洲基础设施投资银行参与项目。尽管亚洲基础设施投资银行不是“一带一路”的正式组成部分，但可以为“一带一路”的成功实施发挥重要作用。
（4）中国的角色
减少对中国“一带一路”预算的依赖还可以令中国和中国公司投资项目的渠道多元化。政府间资助的模式导致中国扮演了项目发起人的角色，承受大量投资风险。如采用PPP模式，前期资金成本由社会资本承担，东道国政府负责持续支付服务费用，而中国可选择通过直接向项目提供商业贷款、股权投资、提供信用支持或结构性支持等方式参与，或将自身的角色限于推荐中国承包商。这样一来，PPP模式可催生贸易和资本投资活动并为中国的产能打开大门，同时，利用PPP模式获得社会资本和东道国政府的长期收入流使得中国可以将自身“一带一路”战略的预算投资于更多国家和地区。
2.有效的风险分摊
在PPP模式下，设计、建设、完工和运营风险分别由最有能力管理上述风险的当事方承担。特别是在发展中的“一带一路”国家，东道国政府机关可能不具有必要的长期项目管理能力，而（当地、中国或者第三国的）社会资本有，因此，与项目交付相关的风险应向社会资本转移。这种模式下，由具有能力管理该风险的当事方来管理或吸收风险，可以更经济的方式定价和降低成本，中国和其“一带一路”的合作伙伴可以实现价值最大化。
PPP项目前期融资阶段进行的全周期分析也将鼓励当事方在一开始就寻找令所有参与方满意的全面的技术和商业风险解决方案，必然有助于降低项目的整体成本。
3.东道国政府投入和可靠性
无论采用何种模式，东道国政府的支持和承诺对于“一带一路”战略的成功都至关重要。通过要求政府重视和取得服务所有权，PPP模式提高了政府通过合作方式“投入”相关服务的可能性。政府机关设定服务规范和标准，并通过招标程序评估私营机构达成相关要求的能力。在收到私营机构的反馈后，政府还可以对上述要求进行变更。
在指定中标人后，政府可以通过合同条款（包括收取损害赔偿金和扣减合同款）确保其要求得以执行。相应的，政府需要对制定的规范和标准（及其执行情况）、选择合作的私营机构以及支付服务款项承担责任。
受益于其管理大型项目的丰富经验，中国可以与东道国政府（特别是发展中“一带一路”国家）协商进一步完善项目流程。这将为政策协调、政治合作以及人员和设施的互联提供一个平台，实现“一带一路”的目标。
4.出口
通过PPP模式，中国可以在“一带一路”项目中发挥除提供资金以外的重要作用。如：
a.在项目采购、交付和运营阶段向“一带一路”国家提供其大型项目管理的知识和经验；
b.提供商品和服务（包括作为项目产品和设备的供应商）；以及
c.最重要的，通过作为项目承包商的中国企业提供专业技术。
d.除令中国的出口更加多元以及释放中国的产能并帮助中国企业“走出去”外，PPP模式还将加快中国从生产型国家向服务型国家的转化过程。
5.利用社会资本的能力
PPP模式的核心是最大限度地利用社会资本的能力。这一特性对于“一带一路”国家投入项目以及通过利用本地资源实现经济乘数效应至关重要。中国完全能够通过输出其丰富的专业技术能力弥补东道国的能力缺陷，为长期协商和合作奠定坚实的基础。
6.外商投资限制
中国投资项目面临的一个实际问题是一些“一带一路”国家对外资持股的限制。PPP模式可以变更项目投资的性质，从而解决这一问题，并且使东道国政府无需在吸引中国资金和放宽对外商投资的限制之间做出艰难选择。
7.灵活性
如上文所述，PPP模式在私营机构资本投资、风险分摊、回报方式以及中国在项目中的作用等方面有灵活性。灵活性是PPP模式的主要优点之一。
8.标准化
从中长期而言，PPP模式可以为“一带一路”国家和整个“一带一路”走廊的发展模式、风险分摊、政府出资模式、社会资本融资结构、担保安排、合同文本和争议解决提供标准化平台。标准化在英国和澳大利亚等成熟PPP市场已基本实现，改善了项目的成本和时间效率。同样，采用PPP模式可加速中国和东道国政府实现“一带一路”目标的进程。
PPP模式的成功因素
为实现PPP模式可带来的利益，中国和“一带一路”国家需要合作，确保具备成功实施PPP模式所需的关键条件。
尽管根据国别或资产类型不同，需要搭建的架构或者面临的挑战可能存在差异，但PPP项目的主要成功因素包括：
1.合适的国家、行业和项目
为实现“一带一路”目标，需要认真选择实施PPP模式的国家、行业和项目。如某个“一带一路”国家没有成功实施PPP项目的长期记录，则应该选择有当地政府全面支持的简单的项目，而不选择复杂的项目。简单的项目也会缓解参与PPP项目的东道国政府、社会资本和中国政府机关的压力，以便在开展更复杂的PPP项目前更加熟悉和了解PPP模式。在项目实施中，建立可信度非常重要。
2.合适的PPP模式
任何PPP项目的成功很大程度上取决于PPP模式的选择。在决策过程中必须具有灵活性，不拘泥于任何一个PPP模式，不断审查项目实施的目标，确保在PPP模式的选择中反映项目的变化。
3.目标明确
应花时间确定项目的参数、规范和标准，项目是否成功只应根据上述参数、规范和标准进行衡量。一个国家的一个项目的错误评估可能会对后续项目产生不利影响。
4.合理的风险分摊
PPP结构中被广泛认可的原则是，风险应由最有能力管理相关风险的一方承担。不恰当的风险转移可能会导致私营机构将其转嫁到定价上，对PPP的价值产生不利影响。此外，还可能增加私营机构违约和项目终止的风险。最后，无论是哪一方的过错，如项目由于私营机构无力管理相关风险而失败，所有参与方将蒙受声誉损失。
法律和监管因素：“一带一路”国家需要考虑的相关因素包括：
1.土地权利
土地权利的重要性取决于项目是否土地密集型项目以及项目选择的PPP模式。对于租赁型安排、BOT/BOO和特许权模式而言，私营机构及其融资方需要确保土地进入权和使用权(a)有足够确定性；(b)不会被随意收回；以及(c)（如需）可以向分包商和融资方转让。
2.资产担保
为了以具有竞争力的条款吸引融资，私营机构需要说服融资方其能够取得合适的担保和信用支持，包括土地以及相关项目权益和项目资产上的担保（或类似权利）。融资方还需要确认(a)其可以始终保持相对于无担保债权人或低顺位债权人的优先性；(b)在发生违约时可强制执行担保；以及(c) 在获得承认的其他司法辖区获得的判决能够强制执行。
3.贷款人介入权
当地法律和项目文件还需要允许贷款人有介入的权利，可以在触发项目终止权之前保护其投资。
4.终止赔偿/政府担保
为确保项目具有商业可融资性/可投资性，东道国政府可能需要同意在项目因特定情况终止的情况下进行赔偿或提供担保。在某些国家，当地法律不允许这种安排，因此需要针对PPP模式修订相关法律（或提供合适的替代方案）。
5.争议解决
当地法律必须允许选择合适的争议解决机制，通常需要在项目合同中增加和强制执行‘仲裁协议’条款，允许在英国等广泛认可的司法辖区进行仲裁。能否在东道国强制执行仲裁裁决也是融资方和承包商的主要考虑因素。
6.PPP部门
虽然并非必备条件，但在东道国政府设立管理PPP模式的PPP部门将有助于确保执行一致性和提高执行的确定性，同时为中国的协商和政策协调提供联系人。PPP部门还可适时制订明确的采购流程，推进程序的标准化，提高效率。
7.有经验的顾问
根据项目地点和资产类型，PPP模式的成功实施还可能需要获得专业技术、财务、保险和法律顾问的意见。专业顾问的参与通常是吸引有竞争力的社会资本参与的必要条件。在东道国拥有相关经验前，中国和其他更发达的经济体是提供上述经验主要渠道，东道国政府需要承认其重要性并降低相关顾问参与的门槛（包括签证和工作许可等）。
One Belt One Road: How can PPPs help?
Cliffordchance
OBOR snapshot
· Land and sea based.
· 60+ countries, 3 continents.
· Centred around 6 transport corridors.
· Access to more than 65% of global population and 35% of global GDP.
· Objectives include reducing trade impediments, facilitating connectivity of facilities and people, financial integration and policy co-ordination.
One Belt One Road (OBOR) is a key initiative of the Chinese government and seeks to restore the country’s old trade routes into other parts of Asia, Europe and Africa, while boosting economic activity and connectivity within a vast region encompassing more than 60 countries, two thirds of the world’s population and one third of global GDP.
While Chinese investment within OBOR is likely to take a number of different forms, in this paper we set out the reasons why the public-private partnership (PPP) model could perform a central role in the delivery of infrastructure projects in OBOR countries. We also identify the conditions to be addressed for the successful deployment of the PPP model within OBOR.
PPPs present a unique opportunity for China and other countries within OBOR to procure infrastructure in a manner which reduces the burden on government budgets, may secure host government ’buy in’ and accountability for projects and provides a pathway for Chinese specialist skills, goods and services, while creating a long term platform for the development of local private sector skills in OBOR countries.
Choosing a PPP model for a project
As these differing models show, PPP can be deployed in a number of ways in order to fit the objectives of China as the sponsor of OBOR, and of host governments and market participants including equity investors, financiers and contractors, and to accommodate operational and strategic priorities in the relevant sector. It is not "one size fits all". For example, if the intention is to reduce the burden on government budgets by attracting private capital (a central driver for PPP roll out in the UK), then a BOT/BTO/BOO model may be preferable to a simple service contract (where capital investment remains the responsibility of the public sector). If risk transfer is the primary motivation, a concession PPP model, used in a number of Australian toll road projects, may be more appropriate. If however the host government seeks to maintain overall control over the service or asset, or re-evaluate and re-let private sector arrangements every few years, a service/management contract or lease arrangement may be more suitable.
The joint venture model is increasingly used in established PPP markets to accommodate a desire for the public partner to have greater transparency over the delivery of the project. In the context of OBOR, this model may provide an alternative mode of investment for China while also mitigating any concerns over the credit worthiness of a host government and therefore being a catalyst for the particupation of third party equity investors (whether from China or elsewhere) who may be encouraged to invest alongisde a prominent Chinese entity.
Role of host governments and Bilateral Investment Treaties
The common element across each of these PPP models is the central role played not only by the private sector participant, but also the Authority which is letting the service/management contract or procuring the BOT or concession. An additional element is added to that role if the Authority or host government establishes a joint venture in order to take an equity stake in the project.
Notwithstanding that China is the overall sponsor of OBOR, the deployment of PPPs in OBOR countries will require the active participation of relevant agencies of the host governments, including in particular the Ministry of Finance/Treasury which will be responsible for funding host government payments to the private sector partner. The ’partnership’ element of PPP is therefore given broader meaning in the context of OBOR to encompass the partnership between China and the relevant host government, and that between the relevant host government agency and the appointed private sector partner. We explore this further in ’Host government buy-in and accountability’ below.
To secure the co-operation and active participation of host governments, the progress China has been making in respect of Bilateral Investment Treaties is significant. Ensuring that such treaties accommodate (or evolve to accommodate) the breadth and scale of proposed OBOR initiatives is in the interest of all parties.
PPP model across asset classes
PPP models has been deployed in a number of asset classes throughout the world. These include economic infrastructure such as roads, bridges, tunnels, rail, ports, airports and broadband services, and social/public infrastructure such as social housing, schools, hospitals, prisons, water, waste and defence facilities. To an extent, PPP models deployed across these sectors are self selective: lease contracts and concessions are more easily deployed for economic infrastructure which attracts a specific user payment (e.g. ports, airports and toll roads), whereas service/management contracts and BOT arrangements (in any form) can be procured across a broader range of economic and social assets.
As is clear from the above, however, contractual settings in individual projects can be adapted to meet the particular requirements of China, the relevant host government and the private sector.
Benefits of PPP
In the context of the OBOR, the PPP model offers a number of benefits when compared to traditional procurement models backed by government to government grants extended by China.
Reduce budget burden
Use of private sector capital
Regardless of whether the capital cost of a project is significant, attracting investment from the private sector both limits the capital commitment from China and/or a host government, and facilitates the provision of financing from the commercial debt markets. While these benefits are most apparent in a BOT or concession PPP which facilitates the private sector meeting a high initial cost of development, the procurement of services via a service/management contract or a lease arrangement can also facilitate management of a host government’s operating budget by freeing working capital and providing cost certainty for services.
China’s investment in OBOR, while vast, could be made to go further in this manner by (a) attracting private sector investment and (b) moving a substantial part of the funding burden to the host government which, under a service/management contract or BOT model, will be responsible for making payments to the private sector for the provision of the relevant service.
The use of private capital in this manner will also deepen the financial markets in the host country over the longer term.
Private sector discipline
The benefit of private sector capital is not restricted to the simple availability of monies. The participation of external financiers will likely result in the development of a robust contractual structure which focuses on ensuring (a) the delivery of the relevant infrastructure on time, to budget and to specification, and (b) the optimal operation thereof, strict due diligence during procurement and timely delivery of information during the term of the project. The incentives on private debt and equity financiers to succeed in delivering the PPP align the interests of such financiers with those of China and its OBOR partners.
Host government creditworthiness
Given that a number of OBOR countries are developing economies, the creditworthiness of host governments may be a challenge for private sector participants and their financiers. The PPP model introduces a partial mitigant by allocating the host government’s payment obligations over the period of the relevant contract. China may also be able to provide guarantees or other credit enhancements to further mitigate these barriers to private sector investment in OBOR countries.
Multilateral financial institutions have been particularly active in helping manage these risks in developing economies by offering credit enhancement and insurance products and by creating project structuring units to assist host governments in preparing their procurements in a manner which is bankable/investable from a private sector perspective. China could take a similar approach, including via the Asian Infrastructure Investment Bank which, though not formally part of OBOR, could play a key role in the successful execution of OBOR projects.
China’s role
Reducing the reliance on China’s OBOR budget could also diversify the way in which China and Chinese companies contribute to projects. A government to government grant puts China in the role of project sponsor, with broad exposure to the risks of the venture. If, under a PPP, any initial capital costs are met by the private sector and the host government is primarily responsible for ongoing service payments, China can choose to provide commercial debt or equity directly to the project, provide credit enhancement or structuring support as described above or limit itself to procuring roles on the project for Chinese contractors. In this manner, the PPP model can generate trade and capital investment and open up pathways for Chinese productive capacity, while expanding the footprint of China’s OBOR capital budget by leveraging it to access private sector capital and long-term revenue streams from host governments.
Efficiency in risk allocation
PPPs are designed so that design, construction, completion and operational risks are allocated to the party which is best able to manage them. In developing OBOR countries, in particular, where host government bodies may not have the necessary long-term project skills and private sector parties (whether local, Chinese or from a third nation) do, it follows that the risks associated with project delivery should be transferred to the private sector. In so doing, China and its OBOR partners should obtain best value because those with the greatest and most relevant expertise will be best able to manage or absorb the risks, thereby pricing them more economically and minimising cost.
The whole-life analysis central to a PPP project at the pre-financing stage also encourages a comprehensive and holistic approach to finding solutions to technical and commercial risks from the outset in a way that is satisfactory to all participants and which will inevitably serve to reduce overall project costs.
The patronage and commitment of host governments is essential to the success of OBOR, whatever the procurement model used. Each PPP model, however, enhances the prospects of such co-operative ’buy-in’ by requiring the procuring Authority to prioritise, and take ownership of, the service output required. The Authority sets the service specifications and performance standards, and then is put in a position to evaluate competing private sector parties’ capacity to meet those requirements in a bidding process. Changes can also be made to such requirements once private sector feedback is collected.
Once the contract is awarded, the Authority is given the contractual tools to enforce its requirements (including via the levying of liquidated damages or payment deductions). As a consequence, the Authority is accountable for the specifications and standards imposed (and their enforcement), the choice of private sector partner and payment for services provided.
With its vast experience of managing large projects, China can consult with host governments to bring robustness to this process, particularly for developing OBOR countries. This will also provide a platform for the coordination of policy, political co-operation and the connectivity of people and facilities, each a central tenet of OBOR.
Exports
By broadening China’s role beyond the contribution of monies to finance OBOR projects, the PPP model generates a pathway for China to contribute:
a.its knowhow and experience of managing large projects in the procurement, delivery and operations phases to OBOR countries;
b.goods and services, including as a supplier of commodities and equipment to projects; and
c.most importantly, specialist skills, particularly via Chinese entities which may become contractors on such projects.
In addition to diversifying China’s exports and providing an outlet for Chinese productive capacity and enterprise, this will accelerate China’s transition from an economy based on manufacturing to one based on services.
Private sector skills
At its core, the PPP model seeks to maximise the use of private sector skills. This will be important for OBOR countries, not only to ensure community buy-in to projects but also to secure the economic multiplier effects which come with local resources being utilised and rewarded. China would be well placed to fill any skills gaps in host countries by exporting the specialist skills it has in abundance, while building the basis for long term consultation and co-operation.
Foreign ownership
One practical constraint on direct Chinese investment into projects is the foreign ownership restrictions which apply in a number of OBOR countries. The platform which the PPP model provides for China to vary the nature of its contribution to such projects may mitigate this concern, while absolving host governments of the need to make a difficult choice between attracting Chinese patronage and relaxing long-established foreign ownership laws.
Flexibility
As described above, the PPP model offers a range of options for capital investment, risk allocation, compensation of the private sector and for the role China takes on a project. This flexibility is amongst its key strengths.
Standardisation
In the medium to long term, the PPP model offers a platform for the standardisation of procurement models, risk allocation, public sector funding models, private sector financing structures, security arrangements, documentation and dispute resolution within OBOR countries and more broadly throughout OBOR corridors. This standardisation process has occurred to a significant degree in mature PPP markets such as the UK and Australia and has driven cost and time efficiency in the delivery of projects. In the same way, deployment of the PPP model can accelerate the realisation of the ambitions of China and host governments for OBOR.
Success factors for PPPs
For the potential benefits of the PPP model to be delivered, China and its OBOR partners will need to work together to ensure that the key conditions for the successful deployment of PPPs are put in place.
While the specific structures to be put in place and challenges to be overcome will vary from country to country and by reference to asset class, the key success factors for PPPs generally are as follows:
Appropriate countries, sectors and projects: To ensure that OBOR’s momentum is maintained, the countries, sectors and projects for PPPs will need careful consideration. If there is no lengthy track record of successful PPP procurement in an OBOR country, the selection of a simple PPP project which has broad local public support is preferable to struggling with a more complex project. It will also help gently ease the host government, local private sector parties, and Chinese government agencies into the PPP process so that a level of familiarity and proficiency is developed before embarking on more complex PPP projects. In formative procurements, building credibility is key.
Appropriate PPP model: The success of any given PPP project will largely depend upon the selection of a PPP model. Flexibility must be built into the decision-making process so that no single PPP model is necessarily preferred over another, and that the objectives for the procurement are revisited over time to ensure that any changes are reflected in the choice of PPP model.
Clarity of objectives: Time should be taken to establish the parameters, specifications and standards for a project and success should only ever be measured against the same. A misguided evaluation of one project in a country or sector will adversely affect each project to follow.
Reasonable risk allocation: The well-established principle that, in a PPP structure, the risks should be allocated to the party best able to manage those risks, needs to be respected. Inappropriate transfer of risk will likely result in consequential pricing by the private sector, which may adversely affect the PPP’s value for money proposition. It may also increase the risk of private sector default and termination of the project. Ultimately, if the project fails as a result of the private sector’s inability to manage the relevant risk, all participants will suffer reputational damage, wherever the fault lay under the contractual documents.
Legal and regulatory factors: Relevant considerations for the OBOR country include:
Land rights – the relevance of land rights will depend on whether the project is land intensive and the PPP model being used. For lease-type arrangements, BOT/BTO/BOO procurements and concessions, private sector contractors and their financiers will need comfort that land access and use rights are (a) broad, (b) not capable of being summarily withdrawn and (c) where relevant, capable of being assigned to subcontractors and financiers.
Security over assets – in order to attract finance on competitive terms, the private sector will need to be able to get its financiers comfortable that appropriate security and credit support can be granted to financiers, including security (or analogous rights) over land, and over interests in relevant project entities and project assets. Financiers will also need comfort that (a) their priority over unsecured or lower ranking claims is maintained, (b) security can be enforced upon default and (c) judgments obtained in recognised foreign jurisdictions will be enforced.
Lender step-in – local laws and project documentation will need to accommodate lender step-in rights in order to permit lenders to protect their investment prior to any project termination right arising.
Termination compensation / government guarantees – in order for projects to be commercially bankable/investable, the host government will likely need to agree to pay compensation to the private partner upon termination in certain circumstances or provide guarantees. Local laws in some jurisdictions prohibit such arrangements, necesstiating amendments to the law to accommodate PPPs (or appropriate alternative solutions to be put in place).
Dispute resolution – local law must accommodate a recognised dispute resolution regime. Often, this requires the inclusion and enforcement of ’agreement to arbitrate’ provisions in project contracts, and the acceptance of arbitration in an established foreign jurisdiction such as the UK. The ability to enforce such arbitral awards in the host jurisdiction will also be a key consideration for financiers and contractors.
PPP unit – although not a pre-requisite, establishing a PPP unit within host governments to control PPP procurement may provide consistency of approach and build greater certainty of execution, while giving China a focus for its consultation and policy coordination activities. In time, a PPP unit could develop a clear process for procurement and drive the standardisation process to achieve efficiency.
Experienced advisors: The successful implementation of a PPP may, depending on location and asset class, require specialist technical, financial, insurance and legal advice. The availability and participation of such advisors will usually be a prerequisite for attracting private sector financing on competitive terms. Until expertise is developed locally, China and other more advanced economies will be vital sources of such expertise – host governments will need to recognise their importance and limit barriers to their participation (including visa and working rules).
