Beijing Municipality, Concessions for Urban Infrastructure Measures

(2) handling of liquid waste and solid rubbish;

(3) toll highways, underground railways, urban railways and other public transport for which fees are charged; and

(4) other urban infrastructure.

Article 3: Concessions for urban infrastructure may take the following forms:

(1) the granting to the concessionaire of investment in the construction and operation of a project for a set period, which will then be handed over without compensation on the due date;

(2) the operation by a concessionaire for a set period of urban infrastructure that has been transferred to that concessionaire, which will then be handed over without compensation on the due date;

(3) provision of public utilities by an appointed concessionaire for a set period; or

(4) other forms agreed by the municipal people's government.

Article 4: Enterprises and other organizations from within the People's Republic of China and from abroad may participate in equal competition in accordance with these Measures and be granted concessions for urban infrastructure in the municipality.

The granting of concessions shall abide by the principles of openness, fairness and equality.

Article 5: Urban infrastructure projects that offer concessions (hereafter, concession projects) shall be decided in accordance with the requirements for urban infrastructure development within this municipality and with the plans for urban infrastructure construction.

Specific projects shall be proposed by the municipal development and reform department together with the department in charge of urban infrastructure and other relevant departments, and shall be reported to the municipal people's government for approval.

Article 6: Once a concession project has been approved the department in charge of urban infrastructure shall draw up an implementation plan. Once this has been examined and amended in accordance with their respective duties by the relevant administrative departments in charge, such as the finance, pricing, planning, land and housing, construction and environmental protection departments organized by the municipal development and reform department, it shall be reported to the municipal people's government for approval and implementation.

The implementation plan shall include the following:

(1) project name;

(2) guidelines as to basic economics and technology of the project;

(3) selected area and other planning conditions;

(4) term of the project;

(5) investment return, pricing and budget;

(6) criteria for and method of selecting project manager;

(7) other governmental undertakings;

(8) guarantee measures;

(9) royalty and the reduction or exemption thereof; and

(10) work unit responsible for implementation.

Article 7: Concessionaries may receive returns through the following methods:

(1) collecting fees from provision of public products or services;

(2) enjoying rights and interests in other developments or operations related to urban infrastructure;

(3) enjoying corresponding subsidies granted by the government; and

(4) other methods agreed by the municipal people's government.

Article 8: The governmental undertakings may involve land use, provision of related infrastructure, prevention of the construction of unnecessary duplicate competitive projects and the necessary subsidies, but shall not involve the sharing of commercial risk, fixed investment return rates or other items forbidden by laws and regulations.

Article 9: The party that obtains the concession shall pay a royalty. The royalty shall be decided by the municipal people's government in accordance with the specifics of the concession project. The royalty may be reduced or exempted for concession projects that are of minimal profit, or for those that enjoy financial subsidies.

Article 10: Once a concession project and its implementation plan are approved by the municipal people's government, the municipal development and reform department or the department in charge of urban infrastructure shall publicize announcements to promote the project.

Article 11: The detailed implementation of concession projects shall be the responsibility of the department in charge of urban infrastructure, or of the district or county people's government, or of other departments designated by the municipal people's government, (hereafter, the implementing work unit).

The implementing work unit shall have the following duties:

(1) it shall be responsible for drawing up the bid invitation document and for organizing the invitation for and submission of bids;

(2) it shall negotiate with the winning bidder and sign the concession agreement;

(3) it shall undertake or assist in the work specified in the concession agreement related to the implementation of the project;

(4) it shall supervise the implementation of the concession agreement; and

(5) it shall take over the urban infrastructure once the concession period is over.

Article 12: The concessionaire shall be decided through the invitation for and submission of bids. Those intending to manage existing urban infrastructure in concession in accordance with Item (2) of Article 3 hereof, may also be directly granted concessions through direct appointment with the approval of the municipal people's government. A concession agreement shall be signed between the department in charge of urban infrastructure and the appointed concessionaire.

Article 13: The setting and adjustment of the prices of the products and services provided by concession projects shall be implemented in accordance with the pricing laws.

Article 14: Once the concessionaire has been decided, the implementing work unit and the concessionaire shall sign a concession agreement. This shall include the following:

(1) project name and content;

(2) the concession method and term;

(3) quantity, quality and standard of the product or service;

(4) method of and time limit on investment and financing;

(5) fees or subsidies, and the mechanism for the adjustment of these;

(6) governmental undertakings and guarantees;

(7) the rights and obligations of the concessionaire;

(8) risk sharing during the concession period;

(9) method and procedure for handing over the project upon expiry of the concession;

(10) liability for violation of the agreement; and

(11) method for resolving disputes.

Article 15: Once the concession agreement has been signed the concessionaire shall register the establishment of the project company within the stipulated period and shall be responsible for the implementation of the concession project.

Article 16: During the course of the implementation of a concession project the relevant administrative departments in charge shall, in accordance with their duties and with the stipulations of the implementation plan, provide the relevant services to the implementing work unit and to the project company.

Article 17: During the concession period the project company shall in accordance with the terms of the concession agreement provide uninterrupted public products or services. It shall maintain the concessioned urban infrastructure and shall guarantee the proper provision of the facility.

Article 18: During the concession period the relevant departments in charge shall have the right to inspect, assess and audit the concession project, and shall correct or penalize in accordance with the law violations of the laws, regulations, rules or concession agreement by the concessionaire, or even revoke the concession.

Article 19: If during the concession period the projected profits of the project company are seriously reduced by changes in government policy, the project company may apply for compensation to the department in charge of urban infrastructure. The departments in charge of urban infrastructure shall check and verify such applications for compensation by project companies within six months of their receipt and shall provide the appropriate compensation with the approval of the municipal people's government.

Article 20: Concessions may not be transferred.

Article 21: If the project company has one of the following circumstances the implementing work unit has the right to terminate the concession agreement:

(1) if there is a serious violation by the project company in failing to provide the public products or services as stipulated in the concession agreement;

(2) if the concession is transferred by the project company;

(3) if the project company affects public interests or safety by terminating or suspending its services without authorization; or

(4) if bankruptcy of the project company or other factors involving the project company mean that the concession agreement cannot be fulfilled.

Article 22: During the concession period the concession may not be revoked except under the circumstances stipulated in Article 21 hereof, and the concessioned urban infrastructure shall not be requisitioned. If with the approval of the municipal people's government the concession is revoked or the concessioned urban infrastructure is requisitioned in the public interest, the appropriate compensation shall be granted.

Article 23: The project company may apply to extend the concession prior to expiry. Applications for extension of concessions shall be made to the department in charge of urban infrastructure one year before the expiry of the concession, and may be granted after assessment and agreement by the department in charge of urban infrastructure and the approval of the municipal people's government.

Article 24: Once a concession is revoked the project company shall hand over the urban infrastructure in accordance with the stipulations in the concession agreement or with the provisions of the municipal people's government. The implementing work unit shall organize a valuation assessment of the facilities and related assets and shall provide compensation where this is provided for in the concession agreement.

Article 25: If, in violation of these Measures, the relevant administrative departments in charge fail to perform their stipulated duties, interfere with the normal operational activities of the project company, practise graft or abuse their powers, the project company shall have the right to report this and make an appeal, and may also in accordance with the law apply for an administrative review or bring an administrative suit.

Article 26: These Measures shall be effective as of October 1 2003.