1. Geographically Distributed Economic Base
Source: Cai & Webster
PPP & Urbanization in the PRC Cai & Webster (22 August 2013)

2. Harbin Spatial Dynamics
Source: Cai & Webster
PPP & Urbanization in the PRC Cai & Webster (22 August 2013)

3. PPP at Municipal Level
China Gas and Local government in building natural gas
Private Sector (China Gas), 196 cities,
Business Model. China Gas builds city gate and sources, distributes natural gas within cities,
Working together- China Gas, Local Government, ADB
Distribution of natural gas on household, factories, (usually uses coal, fuel), commercial users.. Provide to hotel. Supply buses and taxi, no need for gasoline and diesel, with much less emission. Model. China gas works with supplier.. Private sector provides supply… (Municipal Level PPP) from ___, ___. Help with the supply. Working with municipal level of government. How to work and why good model. Before natural government. City has own gas company that have been funded and mandated. Natural Gas more available since Turn coal into natural gas. With infrastructure supply. Since 2004 natural industry in China, only being used for 10 years, local government needs assistance in funding these natural gas infrastructure requirements. Fund operations. Problem on pollutants. Private sector involvement, transfer industry response. More experience in natural gas distribution. Construction, design of infrastructure. Beijing natural gas in cities, fund construction and distribution. Transfer operation risk- operating activities.
Not bear risk beyond private sector . Government policies. Risk borne and managed by government counterpart. Strong support central. Identify risk. Partnerships. 3

4. PPP at Municipal Level – Risks Re-Allocation
Industry Risk
Construction Risk
Funding Risk
Operation Risk
Municipal Government
China Gas
Pricing Risk
Policy Risk
Concession that government gives to china gas. Close cooperation. Seek support at municipal level from Mayors. Coordination with various guarantee partners. Government support.
Private sector bearing industry ri 4

5. PPP at Municipal Level - Cooperation
Functions & Roles
Supervision
Guidance
Coordination
Policy Support
Referee
China Gas
Mayor’s
Office
Related government organization
Constructions Bureau
Urban Management Bureau
Roads Department
Fire Department
Price Bureau
Environment and protection Bureau
Regional gas suppliers
Government
Departments
Functions & Roles
Service Provider
Operator
Gas Distributor
Various units plays a crucial role to successfully manage require cooperation at municipal level. 4

6. Benefits of PPP China Gas Cooperation Private-Public Partnership
Benefits to
Municipal Government
Foreign investment
Infrastructure
No more subsidies
Taxation
Employment
Clean energy solution
Modernization & urbanization
Benefits to
China Gas
Stable and predictable
cashflow
Able to access capital
markets
Further investment
Cooperation
Municipal Government
China Gas
Private-Public Partnership
Society
Benefits to Society
Clean energy
Lower cost of fuel
Better customer services
Safe and efficient operations 6 7 6

7. China Gas PPP Application
ADB Loans Structure
Long Term
Loan
ADB Financial
Resources
ADB as
Lender of
Record
A Loan
CHINA GAS
SOCIETY
Commercial
Banks / FI
B Loan
Upfront cost. 2.40
ADB invested in China Gas. China Gas uses ADB equities. For 196 cities.
ADB Intangible
Resources
Social and Environmental Policies
Corporate Governance & etc. 7 8 7

8. Structure to Finance Multiple PPPsPC
PRC Hold Co
ADB USD Loan
International banks syndication
ADB
CNY Loan
Local Banks
100%
Various Municipal Entities
Project
Sponsor (off-shore)
PC: Project Company
Concession Agreements with municipal governments
CNY Bond
Key success factors:
ADB can provide to borrowers offshore or onshore loans in RMB or USD, provides flexibility since borrower can use loan proceeds as equity investment in China and through investment vehicles can be invested in multiple projects in multtiple provinces. Allowing borrower to fully utilize the loan proceeds.
Investment holding co within China that will allow company to filter through the loan proceeds to an individual project that it wants to develop.

9. What is PPP? Example: Hospital PPP
Occasionally private
Public
Serviced infrastructure
The building
Maintenance
Catering
Support services
Discrete PPP’s IT
Medical equipment
Pharmacy
Pathology
Clinical services
Private versus public

10. Valuing risk Monetising risk transfer
Delivery On Time and On Budget: UK PPP Market
Source: National Audit Office – UK Parliament – Expenditure Auditor

11. Introduction to Beijing Line 4
One of the arterial lines in BJ
28.2 kilometer
24 stations
11 interchange stations (4 stations are to be constructed)
Run time of one trip: 48 mins
Go through education area (Peking Univ., Tsinghua Univ., and Renmin Univ.), high-tech area (Zhongguancun), and attraction spots (Summer Palace, Beijing Zoo)
On Sep 28, 2009, Line 4 opened with ATO and the minimum 3 mins headway
9/20/2018
MTR Corporation

12. BJMTR – PPP Company BIIC BCG MTR 2% 49% 49% *sub-company of BIIC
Concession Agreement
Leasing Agreement
Beijing Municipal Government
Beijing Line4 Investment Company
Beijing MTR
（PPP Company）
Operation Agreement
Hold represent Government
Hold
Part A
Asset
Part B
Asset
Beijing MTR Co. Ltd was funded on 16th Jan 2006
9/20/2018
MTR Corporation
9/20/2018
Page 12
MTR Corporation

13. Over the years, new lines and extensions were
West Rail (2003)
Lok Ma Chau Spur Line (2007)
Ma On Shan Line (2004)
TKO Extension (2009)
MTR line 14
CHINA: Beijing municipality and Beijing MTR Corp Ltd initialled a PPP concession covering railway systems and the future operation of metro Line 14 on November 6. The agreement is still subject to approval by government authorities.
Beijing MTR Corp Ltd is a joint venture of MTR Corp (49%), Beijing Capital Group (49%) and Beijing Infrastructure Investment Corp (2%).
The Line 14 project is divided into two parts. Part A is being undertaken by Beijing Infrastructure Investment Corp and covers civil works accounting for about 70% of the project's 50bn yuan capital cost. Construction of the 47·3 km line started in 2010, with the first 12·7 km expected to open in 2013 and the rest of the line in 2015.
Under the PPP deal Beijing MTR would be responsible for Part B, covering electrical and mechanical systems, rolling stock and operation and maintenance for 30 years.
Beijing MTR would invest approximately 15bn yuan, 30% of the total project cost. MTR Corp would contribute additional equity of approximately 2·2bn yuan to Beijing MTR.
Line 14 will run from Zhangguozhuang in the southern Fengtai District to Shangezhuang in the eastern Chaoyang District, via Chaoyang Park and the Wangjing central business district. The 37 stations will include 10 interchanges.
'Line 14 will be the backbone of public transport between the southern and eastern parts of Beijing, and it will offer great convenience to the local community when it opens', said Richard Wong, General Manager of Beijing MTR, which currently operates Line 4 and the Daxing Line.
Tseung Kwan O Line (2002)
Disney Resort Line (2005)
Kowloon Southern Link (2009)

14. MTR Ownership Model Government Capital Contribution Model
Rail plus Property Model

15. Service Concession Model
Project Cost 100% Funded by The Government.
Details of the O&M Concession to be agreed.

16. Horizontal Integration
Property Development
Highway/Open Space
Station
Link bridge

17. Vertical Integration Retail Property Development Link bridge
Transport Interchange
Station

19. What is PPP? Example: Hospital PPP
Occasionally private
Public
Serviced infrastructure
The building
Maintenance
Catering
Support services
Discrete PPP’s IT
Medical equipment
Pharmacy
Pathology
Clinical services
Private versus public

20. The Balancing Game! Damaged Financial Viability Loss of Time/ Momentum
Environmental & Social Concerns
Affordability
High Cost of Funds
Indecision, Delays, Inflexibility, Corruption
Private Sector Financing
Transparency & Inclusiveness

21. Financing PPP: A Question of Risk Allocation!
Source of Financing
Risk
LOW
DEBT
EQUITY
GOVERNMENT
FUNDING
HIGH

22. 第二部分 基础设施基金促进基建融资多元化
Part two: infrastructure funds promote diverse infrastructure financing
1、基础设施基金的基本结构如下所示：
determine the fund name, type, size, duration, minimum subscription for new shares, etc., the basic design structure:
例如for example：
Investment Management Company
Investor A
Investor B
General Partner
Limited Partner
Commercial bank
Custodian
Infrastructure fund
(limited partnership)
Investment
Infrastructure such as transportation, energy, environment, water, pension

23. ADB’s PPP Operational Plan
Pillar 1
Advocacy and capacity development
Pillar 2 Fostering the enabling environment
Pillar 3 Project development
Pillar 4 Project financing
Create awareness, encourage leadership, identify the potential of PPPs, develop capacity
Help develop the policy, legal, regulatory, and institutional framework
Provide expert support, tool kits, funding costs of transaction advisors, or procurement support
Provide tailored financial support eg guarantees, equity, loans, viability gap funding
EARD
PSOD and EARD

24. Loan Products 1. Investment loan with a performance-based contract
2. Loans to financial intermediaries for onlending, at the financial intermediary‘s risk, to final borrowers
3. Policy-based lending, to support reforms and improve policies. It provides budget support to governments to address development financing needs.
4. Results-based lending, to support governments in designing and implementing government-owned sector programs. Disbursement is linked directly with the achievement of program results.
5. Partial credit guarantee to cover credit risks associated with a borrower’s inability to fulfill its debt service and repayment obligations on time.
6. A range of other products are available for private investors
eg loans, equity investments

25. China Gas PPP Application
ADB Loans Structure
Long Term
Loan
ADB Financial
Resources
ADB as
Lender of
Record
A Loan
CHINA GAS
SOCIETY
Commercial
Banks / FI
B Loan
Upfront cost. 2.40
ADB invested in China Gas. China Gas uses ADB equities. For 196 cities.
ADB Intangible
Resources
Social and Environmental Policies
Corporate Governance & etc. 25 8 25

26. Structure to Finance Multiple PPPsPC
PRC Hold Co
ADB USD Loan
International banks syndication
ADB
CNY Loan
Local Banks
100%
Various Municipal Entities
Project
Sponsor (off-shore)
PC: Project Company
Concession Agreements with municipal governments
CNY Bond
Key success factors:
ADB can provide to borrowers offshore or onshore loans in RMB or USD, provides flexibility since borrower can use loan proceeds as equity investment in China and through investment vehicles can be invested in multiple projects in multtiple provinces. Allowing borrower to fully utilize the loan proceeds.
Investment holding co within China that will allow company to filter through the loan proceeds to an individual project that it wants to develop.

28. CDIA Focus Area Infrastructure Investment Project Cycle Up-stream
Down-stream
Infrastructure Investment Prioritization
Pre-Feasibility
Studies
Linking projects to financing
Feasibility
Study
City Development Plan/Strategy
Financing Arrangements
CDIA Focus Areas
Project Implementation
CDIA works in helping cities to cover the gap between planning to implementation
The program focuses on mid term investment infrastructure development
Cooperating with cities in the preparation of projects to gain access to finance by means of PFS
Enhancing city capacity to prepare better projects in general by institutionalizing the PFS model
Operation & Maintenance

29. PPP Experience within the Program
City/ Urban Intervention (PFS)
Investment value in USD Million
Linked to finance
Pipeline
Gejiu, PR China
Primary Land Development
751.6 X
Banda Aceh, Indonesia
River-based urban infrastructure development, CBD rehabilitation
22.6
Surabaya, Indonesia
Urban transport
Ongoing support
Surakarta, Indonesia
Urban transport (Tram system)
49.0
Yogyakarta, Indonesia
62.8
Faisalabad, Pakistan
Industrial Waste water
141.9
Urban Transport
583.1
Islamabad, Pakistan
Urban Transport (BRT System)
79.0
Ilo Ilo, Philippines
CBD revitalization
9.2
Ferry Terminal System
29.8

30. Finalized Gejiu, Yunnan Focus areas Primary Land Development
CDIA support
USD 350,000 for PFS & Capacity Building
Estimated investment value
USD 750 million
Potential source of financing
PPP

31. CDIA intervention in Gejiu
Before CDIA intervention
Urban development plant with investment estimate of 4 b RMB.
Requesting private sector participation for 3 years. No answer.
Environmental hazards by the existing mining conditions
Local villagers not being addressed.
What we did
Hire real estate experts to conduct the study
Re-visit the urban plan to adapt it to market conditions.
Re-evaluate the investment proposal (environmental issues, social elements,…)
Investigate developer businesses to attract them to the project
Outcomes
Robust and feasible business proposal
Reconfigure the rules of engagement with the private sector
Draft expression of interest and pre-requisites for private sector participants to join a bidding
Draft contract and contract conditions for the engagement with private sector.
Discussion with private party are being held at the moment

32. On going Yongzhou, Hunan Focus areas Primary Land Development
CDIA support
USD 250,000 for PFS & Capacity Building
Estimated investment value
USD 120 million
Potential source of financing
PPP or other sources

33. CDIA intervention in Yongzhou
Before CDIA intervention
Partial intervention in the development of solid waste management.
Segregated points of view about the same topic.
Unclarity about which way to go in choosing systems and investment
Unaware of best environmental practices to solve their issues.
What we are doing
Evaluating the problem from a holistic situation
Involve all departments to become a REAL integrated solid waste management system.
Developing technical and financial solutions that are cost effective
Analyzing the capacities of the local government to face the investment and operations
Expected outcomes
Robust and feasible business proposal to attract private sector according to the real business opportunity and balance risk allocation
Specific PPP structure with rules of engagement and
Pre-requisites for private sector partners
Key points to be included in the draft PPP contract.

34. On going Xiaolan, Guangdong Focus areas
Energy efficiency (Cooling/heating district co-generation)
CDIA support
USD 290,000 for PFS & Capacity Building
Estimated investment value
USD 145 million
Potential source of financing
PPP

35. Next Steps for PPP Project Innovation Support from Innovation in
The IFIs
Urbanization
Demands from
Innovation in
Financing
Project Innovation
Next Steps for
PPP

36. Next Steps for PPP Support from Project Innovation Innovation in
The IFIs
Urbanization
Demands from
Innovation in
Financing
Project Innovation
Next Steps for
PPP

37. Next Steps for PPP Project Innovation Support from Innovation in
The IFIs
Urbanization
Demands from
Innovation in
Financing
Project Innovation
Next Steps for
PPP

38. Next Steps for PPP Project Innovation Support from Innovation in
The IFIs
Project Innovation
Urbanization
Demands from
Next Steps for
PPP
Innovation in
Financing

39. Next Steps for PPP Project Innovation Support from Innovation in
Financing
Project Innovation
Support from
The IFIs
Urbanization
Demands from
Next Steps for
PPP

40. Next Steps for PPP Project Innovation Support from Innovation in
Urbanization
Demands from
Innovation in
Financing
Project Innovation
Support from
The IFIs
Next Steps for
PPP