China Daily: 

The concession model has played a significant role in the construction of infrastructure, such as transportation, municipal services and energy. However, in some areas, there are still problems such as difficulties for enterprises entering the market and lack of standardized management in project implementation. The NDRC recently announced the newly revised Measures for the Administration of Concession for Infrastructure and Public Utilities. How will the new measures help solve these problems? Thank you.

Liu Sushe:

Thank you, I will answer your question. Implementing concession of infrastructure and public utilities is a significant reform measure and institutional innovation in the field of investment and financing. The NDRC, in cooperation with relevant departments and after thoroughly soliciting opinions and suggestions from all parties, recently revised the measures issued in 2015. This revision adheres to a problem-oriented approach, focusing on prominent problems in the field of concession, including the difficulties faced by private enterprises entering the market and lack of standardized management in project implementation, and proposes a series of innovative institutional measures. 

In order to tackle the difficulties faced by private enterprises in entering the market, the new regulations further improve the mechanism and rules in different stages including project initiation, concessionaire selection and project construction and operation, increasing support for private enterprises. First, during the project initiation stage, the measures emphasize the quality of preliminary work, and adopt the principle of sharing risk between government and social capital. Efforts should be made to scientifically assess the feasibility of concession operations and clarify revenue channels. This ensures project implementation and stabilizes the expectations of private investment. Second, in the stage of concessionaire selection, the measures enhance transparency. The regulations require concessionaires to be chosen through a process of open competition, providing diversified participation channels for private enterprises. This approach boosts their investment confidence. Third, during project construction and operation, the regulations protect the legitimate rights and interests of investors. They prohibit differential treatment of concessionaires based on ownership when providing investment and financing support. Additionally, they stipulate that the benefits of cost-reduction, performance-improvement and innovative actions conducted by concessionaires belong to themselves, with the aim of spurring innovation among private enterprises. 

Regarding the lack of standardized management in project implementation, the newly revised measures improve provisions in areas such as the concept and scope of concession, project management and contract fulfillment, striving to enhance project quality and efficiency. First, they emphasize that the primary goal of concession is to serve the public interest and specify that no additional administrative permits are needed. This clear distinction sets it apart from commercial franchises and aims to curb the practice of charging sky-high concession transfer fees. Second, they clarify the responsibilities of the central and local governments and division of labor among different departments, further streamlining the investment management processes. They also define the scope of user fees, improve the price adjustment mechanism and require dedicated funds for specific purposes. Third, they strengthen penetrating supervision and establish a major event notification system. Additionally, from a full lifecycle perspective, they introduce a system to handle complaints and refine the dispute resolution mechanism, urging governments and enterprises to fulfill their obligations.

Next, the NDRC will work with relevant departments to fully implement the newly revised measures, improve the quality and efficiency of concession projects, and continue to stimulate the vitality of private investment. Thank you.