Notice of the National Development and Reform Commission on Strengthening the Investment and Construction Management of PPP Projects in Accordance with Laws and Regulations

Notice of the National Development and Reform Commission on Strengthening Investment and Construction Management of PPP Projects in Accordance with Laws and Regulations

NDRC Investment Regulation No. 1098 of 2019

To the Development and Reform Commissions of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed for planning purposes, as well as to the Development and Reform Commission of the Xinjiang Production and Construction Corps:

In order to implement the decisions and arrangements of the CPC Central Committee and the State Council on addressing infrastructure shortcomings and preventing and defusing risks associated with local governments’ implicit debt, and to strengthen investment and construction management of PPP projects and enhance the scientific basis of investment decision-making for such projects, in accordance with the “Regulations on Government Investment” (State Council Order No. 712), recently promulgated and put into effect by the State Council, as well as the “Regulations on the Examination and Filing of Enterprise Investment Projects” (State Council Order No. 673) and the “Guiding Opinions of the General Office of the State Council on Maintaining Efforts to Address Infrastructure Shortcomings” (Guobanfa [2018] No. 101), the following matters are hereby notified:

I. Conduct comprehensive and in-depth feasibility studies and reviews of PPP projects.

(1) PPP projects involve the allocation of public resources and the safeguarding of public interests; therefore, major issues such as their necessity and feasibility must be reviewed and approved by the government. In accordance with the State Council’s requirement to “strengthen feasibility studies for PPP projects and appropriately determine the project’s key components and investment scale,” all projects intended to adopt the PPP model must undergo a feasibility study. Only projects that pass the feasibility review may proceed with implementation under the PPP model.

(2) The feasibility study for PPP projects shall comprehensively analyze and substantiate the project’s viability from multiple perspectives, including the needs of economic and social development, planning requirements, technical and economic feasibility, environmental impacts, investment and financing schemes, comprehensive resource utilization, and the extent to which the project enhances the quality of life of the public. At the same time, it shall also assess whether the PPP model is appropriate for the project by examining the necessity of government investment, comparing alternative forms of government funding, evaluating the project’s full‑life‑cycle costs, operational efficiency, risk management, and the potential to attract private capital participation.

(3) For PPP projects subject to the approval-based management system, subsequent procedures such as the review of the PPP implementation plan and the selection of private-sector partners may only commence after the feasibility study report has been approved. For PPP projects subject to the ratification-based management system, feasibility studies and reviews shall be conducted concurrently with or separately from the ratification process. For PPP projects subject to the filing-based management system, feasibility studies and reviews shall be conducted separately.

II. Strictly comply with legal and regulatory requirements in carrying out project decision-making procedures.

(4) PPP projects must strictly comply with the Regulations on Government Investment and the Regulations on the Approval and Filing of Enterprise Investment Projects, and duly carry out the approval, ratification, and filing procedures in accordance with laws and regulations. For PPP projects financed through government capital injections, the approval system shall apply as stipulated in the Regulations on Government Investment. Enterprise investment projects listed in the Catalogue of Investment Projects Subject to Government Approval shall be subject to the approval system in accordance with the Regulations on the Approval and Filing of Enterprise Investment Projects. As for enterprise investment projects that fall under the filing system, if the PPP model is to be adopted, a rigorous assessment of both the project’s feasibility and the necessity of the PPP approach is required.

(5) PPP projects that have not complied with the legally prescribed procedures for approval, ratification, filing, and feasibility studies and reviews shall be deemed non-compliant and may not commence construction. No attempt shall be made, whether through review of implementation plans or by any other means, to circumvent or substitute for the project’s approval, ratification, filing, and feasibility study and review processes.

(6) The key contents of the implementation plan, tender documents, and contracts shall be consistent with the approved feasibility study report, approval documents, and filing information. If any of the following circumstances arise during the implementation of the plan, in the course of tendering, or in the execution of the contract, the project shall be resubmitted to the original approving, ratifying, or filing authority for re‑examination and re‑filing procedures: (1) a change in the project’s location; (2) a substantial change in the project’s scale or principal construction components; (3) a substantial change in the project’s technical standards; (4) a change in the project’s investment amount exceeding 10% of the originally approved investment.

III. Strictly review implementation plans and select social capital in accordance with laws and regulations.

(7) Strengthen the review of PPP project implementation plans; only PPP projects that have passed such review may proceed with the selection of private-sector partners. Localities are encouraged to establish joint review mechanisms for PPP project implementation plans, and development and reform departments at all levels shall rigorously verify that the key contents of these plans are consistent with the approved feasibility study report, project approval documents, and filing information. For PPP projects with single‑purpose construction components, small investment scales, and simple technical solutions, the implementation plan may be incorporated into the feasibility study report for concurrent review.

(8) Open tendering shall be the primary method for selecting private-sector partners. Private capital shall not be excluded or restricted from participating in PPP projects; implicit barriers must be eliminated to ensure equal treatment and fair competition. The key contents of the tender documents shall be consistent with the approved implementation plan for the PPP project.

IV. Strictly enforce all provisions of the State Council regarding the capital requirements for fixed-asset investment projects.

(9) In accordance with relevant State Council regulations, the equity capital of an investment project constitutes non‑debt financing; the project entity bears no interest or liability on this portion of funds. Investors are entitled, in proportion to their contributions, to ownership rights under the law and may transfer their equity interests, but they may not withdraw their capital in any form. For fixed‑asset investment projects across all sectors, the equity capital must meet the minimum ratio requirements stipulated by the State Council, thereby preventing excessive debt‑financing and related issues.

(10) The financing methods and funding sources for PPP projects shall comply with relevant regulations on preventing and resolving risks associated with local governments’ implicit debt. It is prohibited to illegally and improperly increase such implicit debt through arrangements such as agreed‑upon buybacks of investment principal or guarantees of minimum returns, so as to strictly guard against risks to local government debt.

V. In accordance with laws and regulations, all PPP projects shall be brought under the unified management of the National Online Approval and Supervision Platform for Investment Projects.

(11) Strictly enforce the Regulations on Government Investment and the Regulations on the Approval and Filing Management of Enterprise Investment Projects. Except for projects involving state secrets, all PPP projects must obtain a project code generated by the National Online Approval and Supervision Platform for Investment Projects (hereinafter referred to as the “Online Platform”) and use this code to handle all relevant approval procedures. No other means may be employed to circumvent or substitute for the requirement that PPP projects be brought under the unified management of the Online Platform.

(12) Relying on an online platform, establish a national information monitoring service platform for PPP projects to strengthen project management and information oversight. For PPP projects that have undergone project approval, ratification, or filing, as well as feasibility studies and implementation plan reviews, project information shall be made publicly available through the platform, enabling functions such as regular publication of nationwide PPP project information, dynamic monitoring, and real-time query access, thereby facilitating greater participation by social capital, financial institutions, and other relevant stakeholders in PPP projects.

(13) Information review on the National PPP Project Information Monitoring Service Platform shall be conducted under a jurisdictional management system. In principle, the development and reform authorities at the same level as the location of the project implementing entity shall review the project information submitted by the project entity. Development and reform authorities at all levels shall strengthen oversight and inspection of PPP project implementation through online monitoring, on-site verification, and other means. Projects that have not been entered into the National PPP Project Information Monitoring Service Platform shall be deemed non‑compliant.

(14) In accordance with the requirements of the Regulations on the Disclosure of Government Information (State Council Order No. 492), the Opinions of the General Office of the State Council on Promoting Government Information Disclosure in the Approval and Implementation of Major Construction Projects (Guobanfa [2017] No. 94), and other relevant provisions, leverage online platforms to prioritize the public disclosure of information related to PPP project approval services, approval outcomes, tendering and bidding, as well as construction and completion milestones.

VI. Strengthen oversight of PPP projects and resolutely impose sanctions on violations and breaches of trust.

(15) In accordance with the Regulations on Government Investment, the Regulations on the Approval and Filing Management of Enterprise Investment Projects, and the relevant provisions of this Notice, strengthen oversight of PPP projects. The government shall honor its commitments in compliance with laws and regulations and may not unilaterally alter the responsibilities and obligations of the government party as stipulated in the contract. Pursuant to the PPP project contract, enhance comprehensive, dynamic monitoring of the social capital party’s performance throughout the entire project lifecycle, to prevent situations where the social capital party, by overextending its capacity through excessive investment or indebtedness, or due to significant changes in corporate equity or management structure, renders the project unviable. In accordance with applicable rules, local governments and social capital entities found to have engaged in serious acts of dishonesty shall be publicly disclosed on platforms such as the “Credit China” website, and relevant departments shall impose joint punitive measures in accordance with laws and regulations.

(16) Provide guidance and oversight to PPP consulting firms to ensure strict compliance with the Measures for the Administration of the Engineering Consulting Industry (Order No. 9 of 2017 issued by the National Development and Reform Commission), including fulfilling statutory filing obligations through online platforms and accepting industry supervision and management. Guide and supervise the credit rating process for PPP consulting firms, encourage them to actively participate in self-regulatory governance, and direct relevant parties to select PPP consulting firms through open competition and independent evaluation of their merits. It is strictly prohibited to restrict the autonomous choice of PPP consulting firms by social capital entities, financial institutions, and other stakeholders through mechanisms such as “shortlists” or “institutional databases.” Any failure by PPP consulting firms to comply with filing procedures, or violations of contractual service requirements, conflict-of-interest avoidance, quality traceability, antitrust regulations, or provisions governing decision-making procedures under the Regulations on Government Investment—particularly when consulting or assessment services exhibit serious quality issues that undermine project decision-making and implementation—shall be subject to penalties in strict accordance with applicable rules.

Development and reform departments at all levels shall, in strict accordance with the Regulations on Government Investment and the Regulations on the Examination and Filing of Enterprise Investment Projects, and with reference to the requirements set forth in this notice, promptly refine their respective regional PPP project management systems to ensure consistency with higher-level laws and regulations. This notice shall take effect as of July 1, 2019. In cases where existing policies and provisions are inconsistent with the contents of this notice, the provisions of this notice shall prevail.

National Development and Reform Commission

June 21, 2019