2010-1-11 15:04:27Chengdu Municipal Government: Administrative Regulations on

Chengdu Municipal People's Government publicized Order No. 164 on November 3, 2009, promulgating the "Administrative Regulations on Chengdu Municipal Government's Franchise" (hereinafter referred to as "the Regulations"). The Regulations will become effective as of January 1, 2010, in place of the presently applicable "Administrative Rules on Chengdu Municipal Government's Franchise"(hereinafter referred to as "the Rules"), which has been implemented since 2003.

Compared with the Rules, the Regulations expressly defines the items which could be franchised by the government, the franchise power division of the governments at the municipal and the district or county level, duties of the franchise decision-making authority and the executive bodies,franchise business modes and durations, procedures, state compensation for franchise termination, and price administration.

According to the Regulations, items directly involving public interests, public resources allocation, the development and utility of non-renewable natural resources, may be franchised by the government. Such items include, but not limited to, water supply, gas supply, heating supply, sewage and garbage disposal, urban track traffic and other ways of public traffic.
The municipal government administrates all the bus routes, operation rights of gas network and pipes within the Greater Chengdu area, as well as other franchise items in Chengdu districts of Jinjiang, Qingyang, Jinniu, Wuhou and Chenghua and other regions appointed by the municipal government. In the regions in Chengdu other than the abovementioned areas, the district or county government shall appoint an organ to deal with franchise administration matters.

Chengdu Municipal Government sets up a "Franchise Administration Commission" (hereinafter referred to as "the Commission"), as the decisionmaking organ responsible for franchise matters within the Greater Chengdu area. The Commission, as the representative of the municipal government, is responsible for reviewing and approving franchise schemes and contracts.

Competent departments of such industries of construction, public traffic, energy, water utilities, environment protection, urban administration, tourism, civil affairs, public security, forestry and landscape garden, are executive organs for the detailed franchise administrative work. The operation may be carried out by ways of "authorized construction - operation - free transfer", "authorized operation - free transfer" or "delegated provision with public products and services". For the first two operation modes, the franchise term should be no more than 30 years, and for the third mode, no more than 8 years.
The procedures for franchise delegation under the Regulations include formulating yearly plans, formulating and reporting franchise schemes, calling for public hearings, approving franchise schemes, selecting operation entities, executing contracts and recording such schemes and contracts. Competent departments shall publicize relevant information to the public within 20 days as of the approval of a franchise scheme, and select franchisees through bidding, auction or internet auction. Such selection result shall be open to the public.

Within 30 days as of the completion of such publicity, the competent department shall sign a franchise contract with the selected franchisee. No items on business risk sharing, fixed investment return or any matter forbidden by applicable laws and regulations are tolerated written in such contracts. Franchisees shall allow other operation entities and users to connect with the franchised municipal utilities, as long as such connections conform to the urban planning and the public security requirements, and are not against the franchisees' lawful interests. Such connection activities should be charged
according to applicable regulations and charging rates made by the province's price authority.