Point Zan Yan'an | PPP Model "Refueling" for Wuqi, Shaanxi Province to Realize Castle Peak with Green Water

From March 7 to 8, Xinhua and China Finance and Economics Network respectively published reports entitled "PPP Model Fuels Green Mountain with Green Water" and "Shaanxi Wuqi: PPP Picking up People's Livelihood". This report takes the first PPP investment project in Wuqi County - "Comprehensive Urban and Rural Governance and Development of PPP Project in Wuqi County" as the main content. It is mentioned that the adoption of PPP model can not only alleviate the current financial pressure, but also reduce the management pressure of the government, and also bring new opportunities to local development.

"Comprehensive Urban and Rural Governance and Development PPP Project in Wuqi County" is invested and constructed by Longyuan Group. The project includes comprehensive renovation project of Wuqi small watershed, Wuqi municipal upgrading project (including road engineering, bridge engineering, comprehensive pipe corridor engineering, urban landscape upgrading), and Wuqi Red Town Tourism Distribution Center project. This project adopts DBFOT (Design-Construction-Financing-Operation-Transfer) mode of operation. The cooperation period is 12 years. The construction period is 2 years and the operation period is 10 years. At present, the project is being implemented smoothly as planned. Miao Jijiang, deputy general manager of Longyuan Mingcheng Investment Management (Shanghai) Co., Ltd., a subsidiary of Longyuan Group, said in an interview with China Finance and Economics Daily that there are three main reasons why private enterprises prefer the project: first, the comprehensive business environment in the project area is better; second, the project itself is a livelihood project; Third, the participation of China's PPP fund will play a great role in promoting the management and implementation of the project and give social capital a "reassuring pill".

The content of Xinhua is reproduced as follows:

Xinhua Beijing, March 8 (Haodou) Loess Plateau, caves, people with towels wrapped around their heads, singing folk songs in northern Shaanxi... This is the description of northern Shaanxi in the textbooks of the post-80s primary school. Perhaps many people think that the same is true of northern Shaanxi now. In fact, with the implementation of the policy of returning farmland to forestry, great changes have taken place in northern Shaanxi today...

Goal: Castle Peak with Green Water

For more than 20 years, returning farmland to forests and closing mountains and forbidding grazing have made the winter in Wuqi County, Yan'an City, Shaanxi Province no longer gray-white. Standing on the hillside, you can see the mountains, grass and trees overlapping far and near, pine and cypress enduring the severe winter. "After returning farmland to forests, Wuqi County's mountains have turned green, the sky has turned blue, the air index has gone up, the city has become beautiful and the people have tasted sweetness. As a government, it wants to further improve the people's sense of acquisition and make it a riverside city with green mountains and waters." Zhang Hongjiang, Executive Vice-County Governor of Wuqi County, introduced.

In order to comprehensively renovate the Luohe River Basin and achieve the goal of "green water", Wuqi County established the "Comprehensive Urban and Rural Governance and Development PPP Project" in 2016 by means of public bidding. In December 2017, Longyuan Construction Group was selected as the leader of the social capital consortium to carry out the project construction.

According to Zhang Hongjiang, the project has three objectives: first, to solve the problem of "little water, muddy water and dirty water" in the urban area, let green water in the urban area first; second, to enhance the urban taste, the existing urban landscape quality needs to be improved, and need to use advanced design concepts to reflect the unique characteristics of small towns in mountain areas; third, Wu Qi's production. The industrial structure is relatively single, and the utilization of red resources, historical and cultural resources, local characteristic agricultural products and other resources is insufficient. It is urgent to fully tap the existing resources, expand tourism and realize industrial diversification.

Trying a brand new mode of operation

According to Liu Ruiwei, deputy director of the Economic Development Bureau of Wuqi County, the comprehensive urban and rural governance project is the first PPP investment project in Wuqi County, which involves the comprehensive improvement of small watershed, the construction of municipal infrastructure and the development of red tourism. The total investment of the project is 1.443 billion yuan, and the period of cooperation is 13 years, of which the construction period is 3 years and the operation period is 10 years.

The project adopts the form of DBFOT (design-construction-financing-operation-transfer). The County Government authorizes Wuqi County Economic Development Bureau as the project implementing agency to carry out relevant construction management work. The city construction investment limited company is authorized to act as the government's investment representative and the bid-winning social capital-Longyuan Construction Group with 1:9 shares. Projects companies are jointly formed by the proportion of rights to finance, design, build, operate, maintain and finally hand over to the government.

Among them, China's PPP fund intends to invest 102.2 billion yuan in the form of equity through Shaanxi sub-fund, thus holding 30% of the project company's equity. In the process of project promotion, China's PPP fund actively guides financial institutions to solve the problem of "difficult and expensive financing" of private enterprises, and strengthens the confidence of financial institutions in financing private enterprises. Luo Wangdong, vice president of Yan'an Branch of China Construction Bank, said, "The investment of China PPP Fund in this project has strongly supported the urban cultural construction and environmental governance in the old revolutionary areas of northern Shaanxi, and contributed to the development of the local red tourism industry."

PPP model has many advantages

"Wuqi County has a single industrial structure and needs rapid adjustment. Tourism is one of the directions." Zhang Hongjiang said that Longyuan Construction Group has good operational experience in Wenyou project and believes that the operation of Red Town can bring vitality to Wuqi's tourism industry.

The reason for choosing PPP mode is to ease the immediate financial pressure, and the other is that PPP mode can relieve the management pressure of the government. "Looking for a professional construction management company for a large-scale project like this can effectively shorten the construction period, enhance service and improve production efficiency by taking charge of the whole process of design, construction, financing, operation and transfer management." Zhang Hongjiang said that while PPP mode guides social capital to provide high-quality services through performance payment and user payment, it can also drive related industries to learn advanced experience, change work style and improve service quality in an all-round way.

Zhang Hongjiang added: "PPP model can not only make some large-scale projects in the short term, but also promote consumption to stimulate local economy." In this way, the advantages of tourism resources can be fully brought into play, which will play a positive role in the construction of infrastructure, the improvement of management level and the increase of employment.