What Are the Best Sources of Franchise Financing?

Book title, published by Tsinghua University Press in 2008, author Wang Shouqing. This book systematically introduces the meaning, characteristics, advantages and disadvantages, application scope, project process, structure, contract, source of funds, risk management, etc. of franchise project financing, and has a large number of practical cases and relevant regulations and policy documents. It can be used as a textbook for graduate-related and undergraduate-related courses of universities and a practical reference book for relevant personnel in the industry.

Franchise project financing

Chapter 1 Overview of Project Financing 1

1.1 The importance of project financing 1

1.1.1 Infrastructure industry planning requirements for financing model reform 1

1.1.2 Development of laws and regulations to promote project financing 2

1.1.3 Beijing's franchise in recent years 4

1.2 Definition of project financing 6

1.3 Characteristics of project financing 8

1.4 Advantages and disadvantages of project financing 8

1.5 Application scope of project financing 9

1.6 Key Success Factors for Project Finance 11

1.7 Application and Problems of Project Financing in China 13

Chapter 2 Models of Project Financing 17

2.1 Classification of Privatization Models 17

2.2 BOT Project Financing Model 18

2.2.1 BOT Project Financing Concepts 18

2.2.2 The basic form of BOT and its evolution 19

2.3 PPP and PFI Project Financing Models 20

2.3.1 PPP and PFI Project Financing Concepts 20

2.3.2 Classification and Principles of PPP 21

2.3.3 Analysis and comparison of BOT and PFI 22

2.3.4 Comparison of BOT, PPP, and PFI 24

2.4 ABS Project Financing Model 25

2.4.1 Overview of ABS Project Financing 25

2.4.2 ABS Project Financing Operation 26

2.4.3 Comparison of A? BS and BOT 27

2.5 Different levels of participation and risk sharing 28

Chapter 3 The Process of Project Financing 29

3.1 General Process of Project Financing 29

3.2 SWOT Analysis of Enterprises' Participation in PPP Projects 30

3.3 Project Selection Phase 35

3.3.1 Project Proposal Phase 35

3.3.2 Signing a cooperation memorandum phase 41

3.4 Tendering and Bidding Stage 41

3.4.1 Bidding Methods 41

3.4.2 Prequalification 42

3.4.3 Basic Contents of Bidding Documents

3.4.4 Tender Evaluation Method and Elements

3.5 Contract Organization Phase 45

3.5.1 Main contract documents and their long-term nature

3.5.2 Main contents of the franchise agreement 47

3.5.3 Reference contract documents 47

3.5.4 Analysis of Guangxi Laibin B Power Plant Project Contract 49

3.6 Financing Phase 49

3.7 Construction Phase 51

3.8 Operation and transition phase 51

Chapter 4 Organization of Project Financing 53

4.1 Project Financing Participants and Contract Structure 53

4.2 Selection of partners for the bidding consortium 57

4.2.1 Analysis of the composition of the legal entity's bidding consortium

4.2.2 General principles for the selection of members of the consortium 59

4.2.3 Consortium member selection process 60

4.3 Organization of the project company

4.4 Fund Structure and Sources

4.4.1 Financing Principles

4.4.2 Financing Channels

4.4.3 Fund Structure

4.4.4 Loan repayment methods 67

Chapter 5 Evaluation of Project Financing 70

5.1 Financial Evaluation of PPP Projects

5.1.1 Overview of Project Financial Evaluation 70

5.1.2 Comparison of existing project evaluation methods 71

5.1.3 Financial Evaluation Methods of PPP Projects 73

5.2 Evaluation of Social Benefits of PPP Projects 75

5.2.1 Overview of Project Social Benefit Evaluation 75

5.2.2 Evaluation Index of Social Benefits of PPP Projects 77

5.2.3 Evaluation method of social benefits of PPP projects 77

5.3 Post-evaluation of PPP projects 78

5.3.1 Features of PPP Project Post Evaluation

5.3.2 Content System for Post-PPP Evaluation 80

5.3.3 Operation and feedback of post-PPP evaluations 86

Chapter 6 Risk Management of Project Finance 89

6.1 Basic Concepts

6.1.1 The Concept of Risk

6.1.2 Concepts of risk management

6.1.3 General Process of Risk Management

6.1.4 Risk management strategies and reasonable sharing

6.2 Major risks and their sharing

6.2.1 Risks at different stages, categories and levels

6.2.2 The main occurrence period of project failure or loan repayment risk

6.2.3 General results of risk sharing

6.3 Common Risk Response Measures 101

6.3.1 Measures to deal with major risks of different projects 101

6.3.2 Sharing of major risks

6.4 Residual Risk Analysis Process 114

Chapter 7 The Role of the Government in Project Financing 117

7.1 Government's role in PPP projects

7.2 Overview of China's PPP Legal Environment 118

7.3 Legal analysis of government guarantees

Chapter 8 Case Studies 126

8.1 Guangxi Laibin B Power Plant Project 126

8.1.1 Project Background

8.1.2 Project Overview

8.1.3 Project participants

8.1.4 Project Process

8.1.5 Legal environment

8.1.6 Basic transaction structure

8.1.7 Financial Analysis

8.1.8 Government incentives 133

8.1.9 Risk Management

8.1.10 Summary

8.2 A BOT Power Plant Project in Central China 140

8.2.1 Application Status of BOT / PPP in China 140

8.2.2 Problems in BOT / PPP Application 141

8.2.3 Case Study of a BOT Power Plant Project

8.2.4 Recommendations for Investing in China's BOT Projects

8.2.5 Conclusion

8.3 A CNG Filling Station Project in Northwest China 147

8.3.1 China's Natural Gas Project Market and Development Trend 147

8.3.2 Financing Opportunities for China's Natural Gas Projects 148

8.3.3 Case Study of a CNG Filling Station in Northwest China 148

8.3.4 Lessons Learned

8.4 Pakistan Matiltan Hydropower Project 154

8.4.1 Project Introduction

8.4.2 Composition of Project Company and Project Management Consulting Company 156

8.4.3 Concessions

8.4.4 Major Contract Agreements

8.4.5 Insurance

8.4.6 Construction Schedule

8.4.7 Construction supervision

8.4.8 Operations

8.4.9 Conclusion

8.5 Pakistan Indus Highway Project 160

8.5.1 Project Introduction

8.5.2 Composition of Project Company

8.5.3 Composition of Project Management Consulting Company 161

8.5.4 Concession Agreements

8.5.5 Government's Major Guarantees and Support Agreements

8.5.6 Financing Plans and Risk Management

8.5.7 Schedule

8.5.8 Construction supervision 165

8.5.9 Business Management

8.5.10 Conclusion

8.6 A South Asian National Pulp Mill Project 166

8.6.1 Analysis of the Investment and Financing Environment of the Country

8.6.2 Opportunities and Challenges Facing Chinese Enterprises for BOT Projects in the Country 167

8.6.3 Design and Selection of Project Financing Plans

8.6.4 Analysis of Key Elements

8.6.5 Analysis Framework of Concession Elements

8.6.6 Analysis of Concession Elements

8.7 An Eastern European National Bridge Project 176

8.7.1 Project Overview

8.7.2 Qualitative Analysis of Project Risks

8.7.3 Quantitative Project Risk Analysis

8.7.4 Conclusion

8.8 A Power Plant Project in a Southeast Asian Country 180

8.8.1 Project Overview 180

8.8.2 Project Management

8.8.3 Lessons Learned

8.9 A South Asian National Hydropower Project 190

8.9.1 Project Overview

8.9.2 Project Management

8.9.3 Lessons Learned

8.10 The British-French Channel Tunnel Project

8.10.1 Introduction

8.10.2 Principles of Risk Sharing for Infrastructure PPP Projects

8.10.3 Initiation and Progress of the British-Strait Tunnel 198

8.10.4 Risk Sharing Mistakes of the Anglo-French Channel Tunnel 200

8.10.5 Conclusions and recommendations 202

8.11 China Beijing Olympic National Stadium ("Bird's Nest") Project 204

8.11.1 Introduction

8.11.2 Project Objectives 204

8.11.3 Development Process

8.11.4 Project Partners

8.11.5 Project Scope and Location 208

8.11.6 Government support and encouragement

8.11.7 Concession Agreement 210

8.11.8 Sources of Financing

8.11.9 Discussion of Three Important Issues

8.11.10 Summary

8.12 Comparative Analysis of Typical Cases at Home and Abroad 216

Main reference 222

Appendix A. Important Government Documents on Project Financing

A1 Decision of the State Council of the People's Republic of China on the Reform of the Investment System (Guo Fa \ 20, July 16, 2004) 226

A2 Several Opinions of the State Council of the People's Republic of China on Encouraging Support and Guiding the Development of Non-Public Ownership Economy, Individual and Private (Guo Fa \ 3, February 19, 2005) 229

A3 Administrative Measures for the Franchise Operation of Municipal Public Utilities (Order of the Ministry of Construction of the People's Republic of China No. 126, March 19, 2004) 233

A4 Model Text of the Urban Water Supply Franchise Agreement of the Ministry of Construction of the People's Republic of China (GF-2004-2501) 236

A5 Model Text of the Urban Pipeline Gas Franchise Agreement of the Ministry of Construction of the People's Republic of China (GF-2004-2502) 251

A6 Model text of the agreement on the franchising of municipal solid waste disposal by the Ministry of Construction of the People's Republic of China (GF-2004-2505) 258

A7 Model text of the Urban Heating Franchise Agreement of the Ministry of Construction of the People's Republic of China (GF-2006-2503) 267

A8 Model text of the Urban Sewage Treatment Franchise Agreement of the Ministry of Construction of the People's Republic of China (GF-2006-2504) 277

A9 Beijing Municipal Infrastructure Infrastructure Regulations (Announcement No. 42 of the Standing Committee of the Beijing Municipal People's Congress, December 1, 2005) 293

A10 Beijing Municipal Development and Reform Commission, Beijing Municipal Administration Commission, Beijing Communications Commission, Beijing Municipal Water Authority, Beijing Municipal Infrastructure Infrastructure Franchisee Procedural Regulations (Jingfa Reform No. 1180, 2006 July 24) 297

A11 Notice on strictly prohibiting government-invested projects from using construction with capital contracting (Jianshi \ 6, January 4, 2006) 301

Appendix B. Government Documents on Foreign Investment 303

B1 Interim Administrative Measures for the Approval of Overseas Investment Projects by the National Development and Reform Commission of the People's Republic of China (Order of the National Development and Reform Commission of the People's Republic of China No. 21, October 9, 2004) 303

B2 Provisions of the Ministry of Commerce of the People's Republic of China on Approval of Overseas Investment Startups (Order of the Ministry of Commerce No. 16, 2004, October 1, 2004) 305

B3 Foreign Exchange Administration Measures of the State Administration of Foreign Exchange of the People's Republic of China (approved by the State Council on February 5, 1989, issued by the State Administration of Foreign Exchange on March 6, 1989) 308

B4 Detailed Rules of the State Administration of Foreign Exchange of the People's Republic of China on the Measures for the Administration of Foreign Exchange in Foreign Investments (\ huiguanzhuzi No. 381 Issued: June 26, 1990) 309

B5 Notice of the State Administration of Foreign Exchange of the People's Republic of China on Simplifying the Examination of Sources of Foreign Exchange Funds for Overseas Investment (Huifa \ 43 March 19, 2003) 312

B6 Notice of the State Administration of Foreign Exchange of the People's Republic of China on Further Deepening the Reform of Foreign Exchange Management of Overseas Investments (Huifa \ 120, October 15, 2003) 314

B7 Notice of the National Development and Reform Commission of the People's Republic of China and the Export-Import Bank of China on Credit Support Policies for Key Overseas Investment Projects Encouraged by the State (Development and Reform Foreign Capital No. 2345, October 27, 2004) 316

B8 Notice of the National Development and Reform Commission of the People's Republic of China and China Export Credit Insurance Corporation on Establishing Risk Guarantee Mechanisms for Key Projects for Overseas Investment (Development and Reform Foreign Investment No. 113, January 25, 2005) 317

B9 Notice of the National Development and Reform Commission of the People's Republic of China and China Development Bank on Further Strengthening Financing Support for Key Projects for Overseas Investment (Development and Reform Foreign Capital No. 1838, September 25, 2005) 318

B10 Notice of the China Development Bank of the People's Republic of China and China Export Credit Insurance Corporation on Further Increasing Financial and Insurance Support for Major Overseas Projects (Kaifafa \ 11, January 18, 2006) 319

B11 Several Opinions of the Ministry of Commerce of the People's Republic of China, the Ministry of Finance of the People's Republic of China, the People's Bank of China and the All-China Federation of Industry and Commerce on Encouraging Support and Guidance for Non-public Owned Enterprises' Foreign Investment Cooperation (Shanghefa \ 94, May 2007 October 10) 320

Appendix C. Media Coverage Reports 323

C1 Risks of investing in China's basic projects

C2 BOT trap 324

C3 Non-public Article 36 exposes private enterprises to franchise 328

C4 BOT: The "hand" of building an investment market 329

What are the bottlenecks in C5 project financing?

C6 Second round of investment boom in public infrastructure construction warns of "thorny roses" 332

C7 Efforts to Avoid BOT and PPP Risks 333

C8 A Thorny Rose--An Interview with Professor Wang Shouqing, a Famous BOT Expert in China 334

Will C9 BOT Make Waves Again--An Interview with Professor Wang Shouqing, a Famous BOT Expert in China 338

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