Abstract
The application of Public-Private Partnership (PPP) mode in transportation infrastructure construction has achieved more progress worldwide; now this mode has been adopted in highway projects of China from 2015. In the application of PPP mode, there are three main facts in China, which include whether the government is responsible for land acquisition and resettlement (LAR), the discount rate changes, and the replacement of business tax by value-added tax (VAT) in 2016. So this paper discusses Value for Money (VFM) quantitative assessment of highway projects under PPP mode in China, which considers currently three actual issues in China. A case study of Heda freeway in China has shown that (1) the government’s responsibility for LAR compensation may attract social capital investor and reduce the risk of social instability, (2) a reasonable range of a low discount rate can greatly reduce government expenditure, and (3) the replacement of business tax by VAT will increase the highway project company’s burden. The research results will be helpful for value of money assessment of highway projects under PPP mode in China and may offer the reference for other countries’ highway projects under PPP mode.
Highlights
The concept of Public-Private Partnership (PPP) was first proposed by England government, while the early designation was called Private Finance Initiative (PFI), which can be found in Fox and Tott [1]
In the application of PPP mode in highway projects, whether the government is responsible for land acquisition and resettlement (LAR) and changes in reasonable profit margins with different discount rates affect the value of money assessment in China
(1) This paper explores the Value for Money (VFM) quantitative assessment of highway projects under PPP mode in China and discusses three reality questions in China, including whether the government is responsible for LAR, the discount rate changes, and the replacement of business tax by value-added tax (VAT)
Summary
The concept of Public-Private Partnership (PPP) was first proposed by England government, while the early designation was called Private Finance Initiative (PFI), which can be found in Fox and Tott [1]. In the application of PPP mode in highway projects, whether the government is responsible for land acquisition and resettlement (LAR) and changes in reasonable profit margins with different discount rates affect the value of money assessment in China. This paper presents some suggestions for the PPP development of highway project, aiming at solving the local government’s fund shortage and attracting more social capital’s investment in highway projects. The structure of this paper is as follows: Section 2 reviews the related literatures; Section 3 establishes the VFM assessment of highway project under PPP mode in China, Section 4 presents a case study of Heda freeway in Heilongjiang Province, Section 5 includes the discussion and gives some suggestions for the PPP development of highway project, and Section 6 is the conclusion
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