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600894

    PPP model refer to between government and person with concession agreement as basic for provide some public products and service, both parts form a partner relationship, and clear both parts of rights and obligations to make the cooperate succeed completed, finally both parts have reach the better result than expect separate actions.

    It introduce the market mechanism to investment and financing to build infrastructure. And not all urban infrastructure project can be commercialized, it ought to say most of infrastructure project can not do this way. And the government shall not think that it can withdraw from investment areas if operation infrastructure project through market mechanism. During the infrastructure enter market process, the government shall continuous investment some money to them. But to government part, the investment amount shall less than traditional ways, the gap between them shall be profit to government by PPP ways.


1,Eliminate the cost overruns. During the initial stage, the public department and private enterprise participate the identification, feasibility research, facilities and financing etc project construction process, it guarantee the feasibility of project in technology and economic, shorten the pre-period circle time, make the project cost reducing. To be PPP model, only when project construction has complete and approved by government, the private department can get revenues, so the PPP model can improve the efficient and lower the cost, and eliminate the risk of complete project and financing risk. According the research, compare the traditional model, the PPP project can save 17% cost for government on overage, and the construction period can completes the project on time.


2,It can conducive transforming the government function, alleviate the finance burden. The government can withdraw from heavy tasks, its role of public service from provider to regulator in infrastructure aspect, so it ensure the quality of construction, also alleviate the pressure of government in finance accounting.


3,It promote the diversification in investment entities. it can provide more finance and skill for government and promote financing system reform by proving asset and serving by private department.  At the same time, it can promote innovation in project design, construction, device management  process aspect participated by private department, improving the efficient, disseminating best ideas  and experiences of management.


4, The government departments and the private sector can learn from each other's strengths and make full use of the advantages of the government's public institutions and private organizations to make up for the shortcomings of the other party. Both parties can form long-term goals of mutual benefit and can provide the public with high-quality services at the most effective cost.


5,It integrates project participants into strategic alliances, it can play the key role in coordination different parts interests.


6,Reasonable risks allocation . Differently with BOT, the PPP can realize the risks allocation at early stage, it make risk allocation more reasonable due to government undertaken some of risks, it reduce the contractor and investment part risks, lower the difficult of financing, improve the possible opportunities of financing. The government shall get a certain control right while burden some risks.


7,It has widely application, this model broken the restrictions of introduction private sector participation the public infrastructure project organization, it can be applied to various types of municipal utilities such as urban heating and roads, railways, airports, hospitals, and schools etc.


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