Shenzhen City, Public Utilities Concessions Measures

Promulgated: March 21 2003
Effective: May 1 2003
Applicability: "Public utilities concessions" means special permission granted by the municipal government to qualified enterprises or organizations for operating certain type of public utilities for a specified period of time and within a specified scope (Article 2).

Main contents: The Measures encourage the use of public funds or foreign capital to build public utilities facilities and to operate certain public utilities in concessions in the form of a wholly-owned enterprise, or equity or cooperative joint venture. Concessions shall be granted by an authorization authority by bidding or enlisting, etc. Enlisting means that the authorization authority invites the applicants, determines the candidates through prudential investigation and intention negotiations and finally selects the concessionaire by an assessment committee. Article 11 sets out the major matters specified in the authorization and the concessionaire's obligations and responsibilities. The government may reduce or exempt the concession usage fees in light of the characteristics of the public utilities (Article 13). Concessionaires may not assign, lease out or pledge the concessions (Article 14). Upon expiration, a concession may be extended for no more than two times (Article 15). A concession will be revoked under any circumstance set out in Article 16, against which the concessionaire may appeal. A concessionaire may apply to the authorization authority for early termination of a concession if it cannot maintain normal operation due to force majeure (Article 18). Parts Four and Five of the Measures deal with the utility pricing and regulation of concessionaires. Article 38 requires concessionaires to submit a five-year business plan, annual business plans, annual reports, changes in the major members of the board or management as well as resolutions of the board to the regulatory department. Article 8 requires a concessionaire, upon application, to make corresponding undertakings in relation to the utility ownership and disposal thereof, equity transfer as well as the affiliated liability between the public utility under its operation and its other business activities. The regulatory department shall ensure that the concessionaire abide by such undertakings (Article 39). Article 40 also sets forth public supervision of concessions.