Recently, the Ministry of Finance issued jointly with more than 20 ministries on The Joint Announcement of the Third Batch of Government and Social Capital Cooperation Demonstration Projects And Accelerate Promoting the Construction of the Demonstration Project, which determined 516 projects including Lanzhou New District modern tram line 1, 2 of the first phase as a national third batch of PPP demonstration project.

The announcement of the 516 demonstration projects account for 44% of the total reporting projects, the total investment is more than 1 trillion and 170 billion yuan. Among them more than 10 billion yuan of the project has 21, including 15 transport category, 4 municipal engineering class (all for rail transport), 1 urban comprehensive development, 1 ecological construction and environmental protection class.  

From the project scale, the demonstration project embodies two characteristics: one is to small and medium sized projects, such projects into the lower threshold, more able to attract private capital to participate in; two is a large project mainly concentrated in the transport sector, the huge investment projects, has also been the mature PPP mode for the field.

The selected demonstration projects of the Ministry of finance, not only increase the recognition of the social capital to the tram projects and financial institutions' support for project financing, and will greatly enhance the Lanzhou New District infrastructure results show, to provide new ideas for a new mode of project construction, and will play a leading role in the demonstration project of PPP for Lanzhou city and even Gansu province.

The project, by the Lanzhou District Bureau of Finance approval, adopt PPP mode to build social capital, by the party and Lanzhou New District Railway Construction Investment Ltd. (hereinafter referred to as "Lantie investment company") after the establishment of item company responsible for the project investment, construction, operation and transfer.Upon the expiration of franchise, the item company will free transfer the project facilities to the Lanzhou New District Management Committee or its designated agencies, and ensure the project facilities in good operating condition.

Project overview:

Lanzhou new district modern tram line 1 of the first phase project from the center square station, the line length of 15.107km, a total of 23 stations, a depot. Average station spacing 0.656 km. Lanzhou new district modern tram line 2  of the first phase project from Weiyi Road station to Jingshi section, the line length of 7.2 km, a total of 8 stations, excluding depot and parking lot, average station spacing of 1.34 km.

Estimated total investment: about 2,646,000,000.00yuan

Construction period: 18 months

Project implementation agency: Lanzhou New District Management Committee

The project government funded representative: Lanzhou New District Railway Construction Investment Co., Ltd.

Construction method: this project adopts the PPP mode of investment, construction and operation, namely the social capital founded item company by Lantie investment company,then the item company and the project implementing agencies signed a franchise agreement with the completion of the project investment, construction and operation.

Social capital: project financing, project design (preliminary design, construction drawing design), construction and installation engineering (including but not limited to the station, interval, rail, communication, signal, power supply, alarm, environment and equipment monitoring, security and access control, automatic fare collection, operation and dispatching center depot), vehicle purchase (including traction system), the purchase of equipment (including but not limited to the communication system, signal system, power supply system, alarm, environment and equipment monitoring, security and access control, automatic fare collection system, dispatching center equipment and depot equipment) and the concession period of the operation and maintenance services.  

Ownership structure: item company is jointly invested and founded by lantie investment company and social capital, capital of 529,200,000.00yuan. Among them, lantie investment company in cash holdings of 30%, or 158,760,000.00 yuan; social capital in cash holdings of 70%, or 370,440,000.00yuan.

Funded ratio: according to the approval of the Lanzhou new district economic development board, the capital of the project accounted for 20% of the total investment, the remaining part of the bank loans accounted for 80%.

Return: user fee and feasibility gap subsidy

The 30 year concession period of the project, the construction period of 1.5 years, the operation period of 28.5 years, upon the expiration of the concession, the project facilities will be free transferred to the Lanzhou new district government, and to ensure that the project does not have any liability and from any third party claim.