A Case Study On The Risk And Interest Of Variable Contract By Quanzhou Citong Bridge PPP Project

With the rapid development of China's economy and society,traffic flow is further increased,the whole society's demand for roads is growing.On the one hand,the state financial resources are limited and can't afford a lot of highway construction funds;on the other hand,private capital is abundant and seeking a good investment path.PPP model can solve the above two issues.At present,although the governments' enthusiasm of promoting road PPP is high,the attitude of social capital participating in the PPP project is still very cautious.The reason is that the lack of flexibility in the contract adjustment mechanism,which making the government,private capital and public interests of the three parties imbalance.This paper chooses the PPP financing project of Citong Bridge as the research object,and firstly introduces the case.In 1996,the Quanzhou Citong Bridge,which was opened to traffic in 1996,realized a large amount of private capital investment in a small amount of state-owned capital.It was the first PPP financing project in the country that could only be set up by the government and provided a good demonstration.With the project passing time,the operation of the Citong Bridge met a lot of problems,and 2016 Quanzhou Citong bridge was repurchased by Quanzhou government in advance.Quanzhou Citong bridge's regrettable end means announcement of the PPP model was over ahead.In the case study of Quanzhou Citong Bridge,it is found that the traffic right of Citong Bridge is faced with the decrease of traffic volume,the right of profit of private capital can not be guaranteed,the mechanism of fee elasticity is missing,and the relationship between government and enterprise is not harmonious and so on.The reason for the risk is the lack of contract variability and contractual spirit of the Citong Bridge PPP financing project.Then,this paper links the risk factors with the contract conditions,and sums up the contents of seven variable contracts,such as government subsidy mechanism,fee adjustment mechanism,flexible concession system,dispute settlement mechanism and refinancing mechanism.At the same time,this article explains how the variable contract can guarantee the government,private capital and public interest balance mechanism: firstly,encourage private capital to improve the service level and product quality;secondly,strengthen the risk management ability;thirdly,give the opportunity to negotiate.In order to deal with the risks and rationally distribute the interests of highway stakeholders,this paper proposes a series of variable measures,including improving the price adjustment mechanism,stipulating the government subsidy or excess profit royalties payment standard and perfecting the price adjustment process.In the flexible concession period,using the rate of return constraint mode,monitor the actual internal rate at the appointed point of time,and then compare with the variable contract to determine whether the project is go on.Dispute settlement mechanism of the trigger conditions and arbitration methods.Build the Citong Bridge ABS transaction structure.Give the surrounding land resources and the corresponding development of supporting facilities and so on.Summary of the PPP financing project of the Citong Bridge: our urgent task is to improve the legal policy of the PPP field and fully understand the life cycle risk of the PPP project.We will optimize the adjustment mechanism on the basis of the relationship between the government and the government,and strengthen the public supervision.So that the variable contract can really play the role of scientific distribution of the interests of stakeholders.