Recently, Ministry of Finance and Ministry of Environmental Protection jointly printed and distributed the "Implementation Opinions on Promoting the Public-Private Partnership in the Water Pollution Prevention and Control Area" (hereinafter referred to as the Opinions), in an effort to well implement the "Action Plan for Prevention and Control of Water Pollution". The Opinions specifies the operational protocols of the Public-Private Partnership (PPP) projects in the area of water pollution control.
The Opinions proposes to improve the institutions and criteria, optimize the design of mechanisms, change the supply patterns, upgrade management patterns, facilitate water pollution prevention and control, set tougher overall target for water environment quality, and follow the three principles of "giving priority to existing pollution", "suiting measures to local conditions", and "highlighting the priorities". It also requires spreading the PPP model in the effort to prevent and control water pollution, focusing on existing projects which have transparent and reasonable pricing and charging mechanisms and fairly strong cash flow supports, considering to a certain extent some new projects, and taking into full consideration the differences of projects in different regions, watersheds and lakes, and sectors. For regions included in the national dynamic catalogue of rivers and lakes under key State protection as well as regions with financial supports from special funds, e.g., for water pollution control, the document requires them adopting differential cooperation patterns and promotion strategies and taking a lead in promoting the PPP model.
The Opinions defines the boundaries of the projects. In light of the characteristics of the projects related to prevention and control of water pollution, the Opinions proposes to identify the integrated environment management of source waters as a priority area to promote PPP. It encourages efforts to effectively integrate projects into packages before implementing the PPP model, improve the overall capacity for yielding benefits, and extend the external benefits.
The Opinions stresses the importance to establish an investment returns mechanism. It proposes to, through combined approaches of user charge, viability gap funding, and government payment, classify projects into profitable, quasi-non-profit, and non-profit projects and provide catered supports, and attract social capitals through land development, eco-tourism and other supplementary projects with high yields.
The Opinions proposes to conduct the project appraisal, selection and promotion in an orderly manner. The environmental protection and financial departments at all levels are required to choose potential projects from among the projects specified by relevant plans and programs including the national economic and social development plans, action plan for prevention and control of water pollution, main pollutant reduction plans, and specific plans in the area of water pollution prevention and control. MoF and MEP will organize every six months a national-scale campaign to apprise and select PPP projects against water pollution, and choose some of the quality projects for promotion. Local financial and environmental protection departments at all levels should work on establishing an operation, coordination, and joint review mechanism as well as implementation and supervision mechanisms of PPP projects.
The Opinions strengths the policy guarantee mechanism and third-party consultations. It proposes that local financial departments at all levels should make overall plans for the expenditure of the special funds for water pollution control and other funds and give appropriate policy preferences to PPP projects. They should make stepwise changes from "subsidies to project construction" to "subsidies to project operation", and from "advanced subsidies" to "afterward rewards". They should also give a hand to social capitals to set up environmental protection foundations with priorities to PPP projects against water pollution, and encourage innovations in environmental financial services.
Moreover, the Opinions notes that financial and environmental protection departments at all levels should step up organization, implementation and supervision, establish an independent, transparent, accountable, and specialized PPP project supervision scheme, carry out information sharing, and put in place a comprehensive evaluation system participated by government and service users. The environmental protection departments should further improve the franchised management system in the water pollution control area, lower the access threshold, lift the approval restrictions, and expand the social capital input channels.
