sharingofresponsibilitiesandbenefits:applicationofpppmodelfornanmingriverwaterenvironmentmanagementchinaenvironmentnews-欧洲杯在线开户

       it was july 19, a sunny day in guiyang city, guizhou province. ms mao and her granddaughter were sitting on a stone bench under a tree. beside them, was jiaxiu pavilion and nanming river flowing by.  “the nanming river has become clear again. now i come here every day,” ms mao grinned.  

      the nanming river, which runs through guiyang, is the mother river of the city. in ms mao’s memory, it was the nanming river where people got drinking water, swam, fished, and washed rice and clothes.  

      however, since the 1970s, the beauty of the nanming river started to fade away.  as industrial effluents and domestic wastewater were directly discharged into the river, more and more people living by the river were forced to leave, leaving growing estrangement between the river and people in the city. in the 1990s, as a result of rapid industrialization and urbanization, the nanming river was terribly polluted, turning into a disgusting “black dragon” from the original popular “green dragon”. 

      how to restore the nanming river became a major task related to people’s livelihood for guiyang.  according to the guiyang water authority (gwa), the municipal government developed a restoration plan at the beginning of this century, in which the three goals of clean water, green banks, and beautiful landscape were specified.  then, a series of measures like shutting down and renovating sources of pollution, and restoring polluted areas were taken at heavy labor and economic costs. however, due to the lack of efficient sewerage, wastewater still remained a problem, polluting the nanming river, particularly the urban section.  


      to wash away the river’s stigma of being “black and smelly”, in november 2012, guiyang officially launched the guiyang nanming river water environment management project which focuses on systematic wastewater treatment. along the urban section of the nanming river, measures including wastewater interception, dredging, odor treatment, building wwtps, and improving landscaping were taken to solve the problems of serious deposition, and black and fetid water.       
     thanks to the project, the water quality of the nanming river has been greatly improved.  

     in this process, a big problem faced by guiyang was how to fund the costly project. the ppp model provided the solution. with the joint efforts of parties involved, the nanming river became clean again in just two years.  

    the government should be a referee.

     in the first phase of the project, the guiyang municipal government introduced diverse financing models such as bot, tot and bt to attract capital.  to break the limits of traditional financing models, and further expand financing channel, in the context that the central government allows private participation in infrastructure projects, guiyang municipal government took the lead in applying the ppp model in water environment management.  in august 2014, the second phase of the project kicked off, mainly for the purpose of improving water quality through building wwtps and sewer pipe networks.  in this phase, guiyang turned to the innovative ppp model for financing. after passing the market test and comprehensive assessment, cweg (formerly citic water) won the project in accordance with relevant national laws and regulations, becoming the private party of the project. 

     according to a source, cweg is the major investor of the project, the wwtp franchise period is 30 years, and the watercourse operation period is 10 years.  then, what’s the role of the government in this marathon cooperation? 

     “in the second phase of the nanming river water environment management project, the government acts as the chief planner who determines the general goals. based on investigations, we made the conclusion that to improve the water quality of the nanming river, the key is tributary management and building wastewater treatment facilities. wastewater interception and treatment systems covering the mainstream and tributaries are the core of the project,” gwa’s project head told the reporter.  

     in addition, gwa needs to work with its partner to arrange for experts and technicians to conduct on-site surveys of the mainstream and tributaries of the nanming river, so as to get firsthand information regarding the water quality, hydrology and flow of the river, for the development of a technical scheme that provides reliable technical support to the project, ensuring its efficient implementation. 

     gwa also acts as a coordinator in land acquisition, demolition supervision, and project quality control.  

     municipal government experts hold that gwa should be the referee of the project, mainly responsible for early-stage general planning, and project tracking.  according to gwa’s project head, cweg is going to build five wwtps along the nanming river. if the wastewater service charge cannot create reasonable profits for the enterprise, the government will make up the difference through buying public service. 

     the private investor should be the player.

     in the ppp model of the project, the private participant as a player is responsible for the financing, design, construction, operation and maintenance of the project in accordance with the government’s general requirements.  
 cweg’s project head said, “in this phase, our job mainly includes building wwtps, sewer pipe networks, and sludge treatment facilities covering the mainstream and tributaries; dredging the tributaries; and restoring the ecological functions of the mainstream and tributaries.  

     according to the agreement reached by both parties, in the second phase of the project, cweg should be responsible for the investment, construction, operation and transfer of the xinzhuang wwtp (phase ii), sanqiao wwtp, mengguan wwtp, huaxi wwtp (phase ii), niulangguan wwtp, further sludge treatment center, and comprehensive watercourse renovation, as well as the operation and transfer of the xinzhuang sludge drying center.  

     during the project, cweg should act according to the requirements of the “referee”. buying social services helps the government reduce financial burden, and at the same time, avoid low efficiency in fields that it’s not expert in. the ppp model leaves professional fields to experts, and thus ensures higher investment efficiency, faster construction speed, higher project quality, and better services.  

    the rapid construction of wwtps involved in the project has fully verified the efficiency of the ppp model.  cweg’s project head told the reporter, “it took us just seven month to complete the first phase of the nanming river water environment management project while ensuring its quality and safety, and the first stage of the second phase lasted for just one year.  the 250,000 t/d xinzhuang wwtp (phase ii) and corresponding 9 km-long sewer pipe network were built in six months, much shorter than the average 18 months. the 50,000 t/d qingshan wwtp and 30,000 t/d madi river wwtp were built in eight months, also much shorter than the average 18 months.” 

     in the ppp model, fund raising is a key task of the private participant.  cweg raised money for the second phase of the project through an innovative way. relying on the citic ppp combo, it obtained money from both chinese and foreign commercial and investment banks, minimizing the financing costs.  according to cweg financial manager mr. li, the “citic ppp combo” provides a financing solution to citic water’s signed projects relying on china citic bank.  mr. li said that a disadvantage of traditional financing models is that they only allow one bank for one project, without taking full advantage of relevant policies. in particular, if the head office of the bank is unable to provide strong support, the timeliness and line of credit will be greatly affected, which often leads to consortium loans known for difficult, insufficient and delayed granting of loans. china citic bank acts as the general credit provider of the project, ensuring the timelessness of lending and size of the loan. part of the credit line was given to foreign banks based on the financing guarantee, which enables easier and faster approval of foreign loans at a lower financing cost.  china citic bank is the first commercial bank that funds the ministry of finance ppp model demonstration project. china development bank has also funded the project as a pilot for ppp-based bank-government-enterprise intergrated river watershed environmental management. 

      in the context that western china is financially weak, and environmental protection is costly, the ppp model provides a solution to the conflict.  the project sets a good example for poverty-stricken western china areas in infrastructure construction.  

      more profits for enterprises and less burden on governments

     the ppp-based nanming river water environment management has created satisfactory social effects. 

     as of june 2015, the inferior class v water of the naming river had decreased from 51% to 7.5% by volume, of quasi-class v water increased from 10.1% to 31.8% by volume, and of quasi-class iv water increased from 8.8% to 30.6% by volume.  as the river becomes clear again, public environmental goods are provided to people in guiyang. 

     first, the stigma of being “black and smelly” has been removed quickly.  according to a source, as one of the first demonstration ppp projects in china, the project progressed very quickly, washing away the stigma of being “black and smelly” within two years, much shorter than the average three years. cweg guizhou division general manager peng caiyun told the reporter, “scientific and systematic investigations laid the foundation for the success of the nanming river restoration.  experts investigated into the sources of pollution and cross section water quality of the nanming river, including both the mainstream and tributaries, and found 13 causes of pollution.  in addition, relying on our rock-solid financial strength, and advanced technologies, particularly the nine core technology systems of river basin environmental management system, underground wastewater treatment system, sludge recycling system, accurate aeration system, etc., the project progressed quickly.  during the project, cweg and the government worked together while performing our own duties, maximizing benefits in the shortest time.” at the eco forum annual conference guiyang, fan yuansheng, vice chairman of the china environmental protection industry association, expressed similar opinions. he remarked, “the participation of a capable and professional enterprise played a decisive role in the success of nanming river restoration.”  he added, “first, the government should select professional and experienced teams, and cweg is such a team for the restoration of the nanming river. second, the government should select teams good at operations, for excellent operations promote the stable realization of project goals. third, the government should select teams with capital needed for the implementation of ppp projects.”  

     tian yu, president of citic private equity funds management co., ltd (citicpe) said, “the success of nanming river’s restoration mainly lies in leaving professional fields to experts, system integration, and integrated planning, which jointly contributed to the realization of the general goals of low investment, high efficiency, high quality, and good effects.” 

     second, land source has been optimized.  

    currently, the ppp model is widely used across the world. in the model, professional and financially strong companies participate in projects, optimizing plans, reducing land use, and lowering investment. the ppp-based qingshan and madi river underground wwtps saved about 91 mu (roughly 6.1 ha.) of land, and taking into account the two flowing water parks, a total of 144 mu (roughly 9.6 ha.) has been saved. peng introduced, “madi river wwtp adopts the sunk structure where the wastewater treatment facility is built underground. above the facility is the comprehensive office building and a park. the whole plant is eco-friendly.” compared with common wwtps built on the ground, madi river wwtp is superior in odor treatment, noise control, and land saving. 

     third, the government’s financial burden has been reduced.  

     the ppp model fills the government’s financial gap with private capital.  according to a source, the project is mainly funded by cweg, which greatly reduced the financial burden of the government.  
 in addition, the model “leaves professional fields to experts”, which also lowered project costs.  peng said, “following the principle of ‘moderate concentration, on-site treatment, and local recycling’, the project adopts a reasonable layout of 12 new small and medium-sized wwtps, which greatly reduced wastewater collection and sewer pipe network construction costs, while promoting the comprehensive utilization of water resource.” the ppp model optimized the project plan, saving over rmb 1 billion of investment, and approximately rmb 158 million and rmb 30 million of water diversion costs and electricity costs annually.  now, the nanming river is no more “black and smelly”, with significantly improved sensory effects. consequently, house prices along the river have gone up. 

     last, the government and enterprise have built full mutual trust.  

     according to gwa, the project adopts such a ppp model in which the government franchises items that create cash flow such as wwtps and sludge treatment plants to cweg at a price not included in project investment, and then buys services to subsidize cweg. in this way, governmental subsidies go to operations rather than construction.  
 cweg financial manager mr. li said, “we create profits based on the franchise, and the difference is made up by the government by raising money through diverse channels, which lowers our risks. the government is like the borrower of a long-term mortgage loan, which helps it smooth annual expenditures, relieve short-term payment stress, and reduce local debt. undoubtedly, this is a win-win cooperation model that ensures value for money.”   

      professor kong hainan at the school of environmental science and engineering at shanghai jiaotong university said, “during the nanming river water environment management project, the guiyang municipal government and its partner should be clear about their responsibilities, and share risks based on mutual trust rather than passing the buck.” 

     at the national urban infrastructure construction experience sharing meeting held last october, the ministry of housing and urban-rural development promoted the nanming river water environment management project as an example. at the meeting, minister chen zhenggao highly praised the project, “the restoration of the naming river in guiyang, guizhou is very successful, especially in terms of comprehensive management, integrated planning, and phased implementation!” in december 2014, the nanming river water environment management project was selected as one of the first national ppp projects, and an example of urban black and smelly river restoration. recently, it has attracted a growing number of governments who are interested in learning its experience.