Yulin-Zhanjiang Expressway(Guangxi Section) Public-Private Partnership (PPP) Project

Description

With the accelerating development of the “Pan-Pearl River Delta Economic Belt” and the “China-ASEAN Free Trade Area”, as well as the implementation of the national development strategy of building the Silk Road, the economic exchanges between Yulin and Zhanjiang are more frequent. However, due to the absence of a high-grade motorways network for a long time, the distribution and transport between the two places are not smooth. Therefore, it is urgent to build an expressway between Yulin and Zhanjiang as an inter-provincial passage to connect Yulin to the sea.

The approved budgetary estimates of the Yulin-Zhanjiang Expressway (Guangxi Section) project is 7.061 billion yuan, including 5.19 billion yuan for construction and erection. The total length of the main line is 74.674 kilometers. It is a two-way four-lane expressway with a design speed of 120 km/h and a roadbed width of 26.5 meters.

The project adopts the “BOT + government subsidy model”. The implementation unit is the project company established jointly by the First Harbor Engineering Company Ltd. and the Second Highway Survey, Design and Research Institute Co., Ltd. of CCCC. The government doesn’t participate in investment or management. The project company is responsible for the financing, construction, operation and maintenance of the project. Operating independently, the project company is responsible for its profits and losses. During the construction period, the government provides 0.5 billion yuan for the private investor as a subsidy of Guangxi Zhuang Autonomous Region for “the access to roads of every county,” which is used for land acquisition and demolition and paid in batches by the Department of Finance of Guangxi Zhuang Autonomous Region. During the operation period, the municipal level finance department provides viability gap funding. The cooperation period of the project is 34 years, including 4 years for construction and 30 years for operation. The required capital is 20% of the total investment, funded by the private investor; 80% of the total investment is financed by the project company through bank loans and other means.

Five highlights in the project implementation process are worth learning by other projects: 1）The fixed governmental subsidy can reduce the pressure on fiscal expenditure; 2) The easing of regulation by the government leaves sufficient room for the innovation of enterprises; 3) The government recognizes its weaknesses and introduces the private investor to participate in the adjustment of the project feasibility planning; 4) It gives full play to the technical advantages of the private investor and enhances the depth and strength of design; 5) It brings the advantages of the private investor in communication, technology and financial support in the demolition, realizing the land requisition and resettlement of over 500 hectares within 3 months and breaking the record of controlling the cost of land requisition and resettlement within the budgetary estimates.

It took 1050 days from the launching of the construction of Yulin-Zhanjiang Expressway(Guangxi Section) in August 2017 to the official opening to traffic in June 2020, one year and two months ahead of the original plan of four years. In April 2019, it was selected as a human-centered PPP case by the United Nations Economic Commission for Europe and included in the collection of the 2020-2023 Cases of the Technical Committee Finance and Procurement of the World Road Association (PIARC).

Key Data

The approved budgetary estimates of the Yulin-Zhanjiang Expressway (Guangxi Section) project is 7.061 billion yuan, including 5.19 billion yuan for construction and erection. The total length of the main line is 74.674 kilometers. It is a two-way four-lane expressway with a design speed of 120 km/h and a roadbed width of 26.5 meters.

The project adopts the “BOT + government subsidy model”. The cooperation period of the project is 34 years, including 4 years for construction and 30 years for operation. The required capital is 20% of the total investment, funded by the private investor; 80% of the total investment is financed by the project company through bank loans and other means. During the construction period, the government provides 0.5 billion yuan for the private investor as a subsidy of Guangxi Zhuang Autonomous Region for the access to roads of every county, which is used for land acquisition and demolition and paid in batches by the Department of Finance of Guangxi Zhuang Autonomous Region. During the operation period, the municipal level finance department provides viability gap funding.

Stakeholders

Yulin Municipal Government

Status Quo/Progress

On September 9, 2020, the Guangdong section of Yuzhan Expressway passed the delivery inspection.

On September 17, 2020, the Yulin-Zhanjiang Expressway (Guangdong Section) invested and constructed by the First Harbor Engineering Company Ltd. and the Second Highway Survey, Design and Research Institute Co., Ltd. of CCCC and managed by the CCCC Fund Management Co., Ltd. opened to traffic, and Yulin-Zhanjiang Expressway became in full operation.

Innovation Point

The private investor is attracted through the “user payment” return mechanism. The “BOT+Viability Gap Funding” mode in PPP is adopted. Meanwhile, the government eases regulation to enable the private investor to participate in the design, project feasibility report, and demolition, which brings its technical and professional advantages into full play and injects sustainable momentum and vitality into the PPP project. 

Related Links

Project introduction of the China Public Private Partnerships Center:

http://cpppc.org/guangxi/999422.jhtml

附件-从广西玉湛高速公路案例看PPP实践创新做法.pdf