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PPP Model to be Adopted for All Future Sewage and Waste Disposal Projects

The public-private partnership (PPP) model has received official backing as the basis for all future sewage and waste disposal projects. A recent circular from the Ministry of Finance and a number of other government departments indicated that this was the approved route for improving the efficiency of all such schemes, while also making it clear that the government would retain a role in regulating the sector overall.

It is now envisaged that the private sector will play a key role in systematically integrating the collection, transfer, treatment and disposal of all sewage and waste products. In addition to this, steps will be taken to implement performance assessments and performance-related pay in a bid to improve the quality and efficiency of the services delivered via the PPP model.

Under the terms of the proposed PPP arrangement, the relevant government authority must sign an agreement with the private enterprises concerned, while making clear the required mechanism for the allocation of responsibilities and benefits, as well as the sharing of any associated risks. To this end, a project company with independent legal status shall be established in order to ensure the due allocation of all business risks.

While the government body in question may provide the project partners with any necessary assistance in compliance with the relevant PPP policy provisions, it shall not provide any financial guarantee for the project nor assume unlimited responsibility for any of the commercial risks associated with the project. Furthermore, it shall not undertake to reimburse any amount invested by the private enterprise concerned nor take responsibility for the loss of any initial investment on the part of the private contractor. It is also forbidden to make any commitment with regard to the minimum profit/revenue due to accrue to the private contractors concerned. 

For further details (in Chinese), please refer to the following website:

Circular on Full Implementation of PPP Model in Sewage and Waste Disposal Projects With Government Participation (Cai Jian No. 455 [2017])

Content provided by Picture: HKTDC Research
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