1. highway PPP project contract system level

Highway PPP project contract system is divided into two levels:

The first level is the core contract system composed of the project implementing agency, the social capitalist who won the bid, the representatives of government investors (if any), the investment agreement signed between the project companies, the PPP project contract, and the shareholder contribution agreement.

The second level is the contract system signed by the project company and relevant entities in the process of project promotion, including financing contracts signed by the project company and financial institutions, insurance contracts signed by insurance companies, survey and design contracts signed by survey and design units, construction contracts signed by construction units and equipment and materials procurement contracts signed by equipment and materials suppliers.

2. Core contract of highway PPP project

(1) investment agreement

The investment agreement is a contract signed between the implementing agency and the social capitalist, which mainly defines the rights and obligations of the implementing agency and the social capitalist and the responsibility of the social capitalist to the project company. It is the basis for the implementing agency project company to sign the PPP project contract.

(2)PPP project contract

PPP project contract is a contract concluded between the implementing agency and the project company for PPP project investment according to law. Its purpose is to allocate the project risk reasonably between the implementing agency and the project company, clarify the relationship between the rights and obligations of both parties, ensure that both parties can claim their rights reasonably according to the contract, correctly perform their obligations, and ensure the smooth implementation of the project throughout the life cycle. PPP project contract is the basis of other contracts and the core of the whole PPP project contract system.

(3) Shareholders' agreement

The shareholders' agreement is signed by the shareholders of the project company, and a long-term and binding contractual relationship is established between the shareholders. Shareholders' agreements usually include the following main clauses: preconditions, establishment and financing of the project company, business scope of the project company, shareholders' rights, shareholders' commitment to perform the PPP project contract, shareholders' business plan, equity transfer, composition of shareholders' general meeting, board of directors and board of supervisors and their terms of reference, dividend distribution, default, termination and post-termination treatment mechanism, force majeure, applicable law and dispute settlement.

The main purpose of the project investor's shareholder agreement is to set up a project company to be responsible for the construction, operation and management of the project. Therefore, the shareholders of the project company may include contractors, raw material suppliers, operators, financiers and other subjects who wish to participate in the project construction and operation. In some cases, in order to directly participate in the major decision-making of the project and master the implementation of the project, the government may also become a shareholder of the project company through direct shareholding (but the government usually does not hold shares and directly participates in the operation and management). In this case, the government, like other shareholders, enjoys the basic rights and interests as shareholders, but it also needs to fulfill the relevant obligations of shareholders and bear the project risks.

In addition to the general provisions on the rights and obligations between shareholders, the shareholders' agreement may also include special provisions related to the implementation of the project. Taking the contractor as a shareholder of the project company as an example, the dual identity of the contractor may lead to a certain degree of conflict of interest among shareholders, which will be reflected in the shareholders' agreement. For example, in order to prevent the contractor from enjoying too much control over the project contracting, other shareholders may restrict the contractor's voting rights and creditor's rights in the project construction in the shareholder agreement; If the contractor's main purpose in participating in the project is to undertake the design and construction of the project and is unwilling to hold shares for a long time, the contractor will hope to make relevant arrangements for the transfer of shares in advance in the shareholders' agreement; On the other hand, if the financier is also a shareholder, the financier will usually demand that the contractor's right to transfer its equity in the project company be restricted, for example, the contractor is required to transfer its equity in the project company at least after the expiration of the project defect liability period.

3. Highway PPP project financing contract

Broadly speaking, the financing contract can include the project loan contract signed by the project company and the financing party, the guarantee contract signed by the guarantor and the financing party for the project loan, and the direct intervention agreement signed by the government and the financing party and the project company. The project loan contract is the most important financing contract.

Project loan contracts generally include the following clauses: representation and guarantee, preconditions, loan repayment, guarantee and guarantee, offset, breach of contract, applicable law and dispute settlement. At the same time, for the sake of loan security, financiers often require the project company to use its property or other rights and interests as collateral or pledge, or its parent company to provide some form of guarantee or the government to make some commitment. These financing guarantee measures are usually embodied in guarantee contracts, direct intervention agreements and PPP project contracts.

It should be particularly emphasized that the financing arrangement of PPP projects is the key link in the implementation of PPP projects. Encouraging the diversification of financing methods, guiding the innovation of financing methods, and implementing financing guarantee measures are very important for enhancing investors' confidence, safeguarding investors' rights and interests, and ensuring the smooth implementation of PPP projects.

4. highway PPP project performance contract

(1) project contract.

Project companies generally exist only as financing entities and project operation managers, and may not have the conditions to design, purchase and build projects by themselves, so they can entrust some or all of the design, purchase and construction work to engineering contractors and sign project contracts. The project company can sign a general contract with a single contractor, or sign contracts with different contractors separately. The selection of contractors shall comply with relevant laws and regulations.

Because the performance of the project contract often directly affects the performance of the PPP project contract, and then affects the loan repayment and income of the project. Therefore, in order to effectively transfer the risks in the process of project construction, the project company usually signs a "turnkey" contract with the contractor with a fixed price and fixed construction period, and transfers all the risks such as project cost overrun, project delay and unqualified project quality to the contractor. In addition, the project contract usually includes performance guarantee and liquidated damages, which further restricts the contractor to correctly perform its contractual obligations.

(2) Operation service contract.

According to the different operation contents of PPP project and the management ability of the project company, the project company sometimes considers outsourcing all or part of the operation and maintenance of the project to experienced professional operators and signing operation service contracts with them. In one case, the outsourcing of operation and maintenance affairs may require the prior consent of the government. However, the operation and maintenance obligations of the project company agreed in the PPP project contract are not exempted or alleviated because the project company subcontracts all or part of the operation and maintenance affairs to other operators.

Because the term of PPP project is usually long, there are great management risks in the operation and maintenance of the project, which may lead to project losses due to poor management of the project company or operator. Therefore, the project company should give priority to operators with good credit standing and rich management experience, and transfer risks by pre-agreeing on the risk allocation mechanism or taking out relevant insurance in the operation service contract, so as to ensure the smooth operation of the project and obtain stable income.

(3) the product or service purchase contract.

In PPP projects, the main investment income of the project company comes from the sales income of the products or services provided by the project, so it is very important for the project company to ensure the stable sales target of the project products or services. Depending on the payment mechanism of PPP projects, the purchaser of project products or services may be the government or the end user.

5. Highway PPP project insurance contract

Because PPP projects usually have large capital scale and long life cycle, project companies and other relevant participants responsible for project implementation usually need to insure different types of risks at different stages of project financing, construction and operation. The types of insurance that may usually be involved include cargo transportation insurance, engineering all risks, professional insurance for design or other professional services, indirect loss insurance and third-party liability insurance.

6. Other contracts for highway PPP projects

PPP projects may involve other contracts, such as consulting service contracts signed with professional intermediaries such as investment, law, technology, finance and taxation.