A twin story of PPP and environmental protection e

Love and kill? Jinyongxiang, general manager of Dayue consulting, told me about his personal experience. At an environmental protection conference, sunminghua, vice president of Suez, asked Jin Yongxiang, the largest PPP intermediary consultant in China, "is there a big mountain that has been doing PPP because environmental PPP is so difficult now?"

the reason why Sun Minghua doubts is that in the past two years, China's private environmental protection enterprises have constantly encountered problems and frequently sought help

in the past five years, Dayue has provided consulting services for more than 1000 PPP projects, involving an investment of 1 trillion yuan, and is committed to promoting PPP

a supervisor told that the recent problems of environmental protection enterprises are mainly the rapid expansion of enterprises and the lack of funds. He said: "when the enterprise leverage is too large, no matter which mode is selected, it is not PPP that is in decline at this time, but the problem of the enterprise itself."

Jin Yongxiang agrees with the views of the above regulators. He believes that PPP is an economic policy, which is better than the previous efficiency. Now the government has launched PPP projects, which actually provides opportunities for private enterprises, but enterprises do not consider their affordability and expand blindly, resulting in the current problem

Xue Tao, executive director of E20 Research Institute, which has been focusing on environmental PPP research for five years, told the economic observer that in the past two years, there have been many environmental protection enterprises with problems among E20 member enterprises

Xue Tao said that in 2018, about 17 Listed Companies of environmental protection private enterprises encountered financial tightening, which led to cash flow obstacles and the risk of equity pledge explosion, and some enterprises had to introduce state-owned capital, or even give up controlling equity

he said: "after our analysis, we found that about 50% of them are related to the types of non operational PPP projects implemented since 2014. Understanding this distinction, we can understand the problems of PPP development in recent years and the aspects that need to be improved."

question

as early as the evening of December 20, 2018, Shenzhen Tiehan ecological environment Co., Ltd. (hereinafter referred to as "Tiehan ecological") learned that Tiehan ecological 2. After unpacking, it plans to introduce a strategic investment institution - Shenzhen Investment Holding Co., Ltd. (hereinafter referred to as "Shenzhen Investment Control"), which is 100% controlled by Shenzhen SASAC, through the transfer of shares by major shareholders. After the transfer is completed, the shares held by the related parties designated by Shenzhen Investment Control and Shenzhen investment control or the funds directly or indirectly managed by them account for 10% of the total shares of Tiehan ecosystem, and Shenzhen investment control will become the second largest shareholder of Tiehan ecosystem

Dongfang garden, a leading enterprise in the environmental PPP industry, announced as early as November 2 that Ms. He Qiaonv and Mr. Tang Kai, the actual controllers, had signed the equity transfer framework agreement with Beijing Yingrun Huimin fund management center (limited partnership). Yingrun Huimin fund plans to participate in Oriental Garden and receive no more than 5% of the total share capital of the company, becoming the strategic shareholder of Oriental Garden and providing support for the healthy and stable development of Oriental garden. Yingrun Huimin fund is the Fund subject invested by Beijing Chaoyang District State owned capital operation and management center through its master fund, Beijing Yingrun fund management center (limited partnership)

earlier in 2018, nearly a dozen environmental protection enterprises such as Shengyun environmental protection and Sanju environmental protection have introduced state-owned capital

Xue Tao believes that in addition to the problems of their own operations caused by the operational PPP projects that Shengyun and Kaidi participated in, due to low quality and rapid expansion, more private listed companies are involved in the field of water environment and landscaping. Because they participate in non operational PPP projects, the fields touched by the operation of plastic granulator are extremely extensive, and the later policy and financial environment are subject to shocks

as for other listed companies in the field of solid waste, the overall performance is stable, and a few companies that have not participated in such non operating PPPs are still safe

Xue Tao further explained that in general, non operational PPPs are basically pure government paid PPPs, but the opposite is not true, that is, there is still a pure government paid operational PPP model, for example, in the field of environmental protection solid waste, mainly in the two sub sectors of sanitation and landfill

he said that non operational PPPs in the field of environmental protection are mainly concentrated in river regulation, landscaping, sponge City, underground pipe gallery, rural environmental governance and other fields. Their basic characteristics include the use of "adding DOP availability payment from a small feeding port" to repay the project investment in installments. In the later stage, the proportion of annual operation and maintenance costs compared with availability payment is very low, and the project boundary is fuzzy, Social capital basically does not have the power to shut down services

"we review the above listed companies with problems, which are basically involved in such projects. In the context of the tightening of the financial environment and Document No. 92 (notice on standardizing the management of the project database of the government social capital cooperation (PPP) comprehensive information platform issued by the general office of the Ministry of Finance in November 2017) ）Under the background of rectifying warehousing projects and strictly controlling non-standard projects by financial institutions, state-owned enterprises and central construction enterprises can tolerate these impacts, but for private listed companies, there are risks of cash flow fracture and equity pledge explosion. It can be seen that these non operational PPP enterprises are mainly involved in the fields of water and landscape, except for the central enterprises of construction. This is why companies such as sound, Oriental Garden and Tiehan ecology are facing difficulties. "

in contrast to these non operational PPP projects, the current environmental protection PPP projects such as solid waste and even sewage treatment. In 2016, the Ministry of Finance issued the notice on further promoting the cooperation between government and social capital in the field of public services. It is proposed that in the field of public services such as waste treatment and sewage treatment, projects generally have cash flow, a high degree of marketization, the PPP mode is widely used, and the operation is relatively mature. The PPP mode should be "enforced" for new projects in various regions, and the central government will gradually reduce and cancel the special construction fund subsidies

Xue Tao said that both solid waste and sewage and waste treatment industries stipulated by the Ministry of finance are mainly industries with operational attributes, liquidity, relative support from financial institutions, and relatively guaranteed government subsidies

financing dilemma

in the past two years, environmental protection enterprises and even environmental protection PPP projects can be equipped with O-ring fixtures, special fixtures for the tire industry, etc., and the last problem they face is financing

a person in charge of the eco-environmental PPP project told that he had been involved in the financing of a PPP project since October 2017. For more than a year, he has communicated with securities companies, fund companies, direct investment funds, commercial banks and policy banks, and has also applied for PPP project subsidies from the Ministry of Finance and HP financial subsidies. Up to now, there has been no substantial financing landing and subsidy funds in place. In fact, his project is a demonstration project of the Ministry of finance, which is also an environmental protection project, and all of them belong to the type of current national key support and attention

the above person in charge believes that there are several main reasons for the current financing difficulties. The first is the great changes in policies. In 2016 and 2017, PPP was vigorously developed, a large number of loans were issued, and it was urgently stopped in January 2018. The problems of the entire PPP project pool were rectified, and a large number of problem projects were cleared. Many of them were projects that had not been approved by one implementation and two evaluations (one implementation: implementation plan; two evaluations: evaluation of value for money and evaluation of financial affordability). These problem projects started construction, and the financing loans were cleared, How do financial institutions deal with it? Secondly, in June 2018, the state adjusted policies, liberalized the financial environment, and encouraged financial institutions to vigorously support high-quality PPP projects,

however, financial institutions are not charity after all, they are profit seeking. Under the condition of the national five-year benchmark interest rate of 4.9%, the external market has already reached 7%-8%, and even some real estate financing interest rates have reached 12%-13%. If the benchmark interest rate is not adjusted, it is difficult for PPP project companies to negotiate financing with financial institutions at a reasonable interest rate. Moreover, it was fully suspended in January 2018 and fully opened in June 2018, with unpredictable policies. Many financial institutions are willing not to do financing business, so as to avoid the emergence of new policies after financing. After frequent policy changes, the actual implementation of the policy has been very long. It has been six months since it really landed on the front line to complete financing and lending