Local consortium wins Guizhou Province railway PPP

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Local consortium wins Guizhou Province railway PPP

A consortium composed of China Railway 20th Bureau Group, a subsidiary of China Railway Construction Corporation Limited, Road & Bridge International, Guizhou Bridge Construction Group, and China Railway No. 2 Engineering has won the Guizhou Province railway PPP project in China.

The total project investment is estimated at RMB5.04 billion (US$792.6 million) for the term of concession operation (exclusive of the construction term) of 30 years tentatively. The equity component will be 40% of the total investment.

China Railway Construction Corporation Limited has reported in an statement the following financial information about the project:

The proportion of equity by government investors and PPP investors is 49% and 51%, respectively, in which China Railway 20th Bureau holds 22% of the equity. Government investors are not entitled to dividends until the internal yield of PPP reaches 8%; PPP investors may opt to exit or continue to participate in operation after the internal yield of PPP reaches 8% or more.

If the cash flow of the project company is negative at the beginning of the project's operation, the government shall pay the shortfall; if the internal yield cannot reach 8% after evaluation following three to five years of operation, or cannot meet 70% of the benchmark interest rate of long-term loans for the same term even the government pays the shortfall, or the project cannot be carried out continually due to the adjustment of the national policy and force majeure, the government is required to repurchase the PPP project.

The contract amount of the project undertaken by China Railway 20th Bureau is approximately RMB2.776 billion, representing approximately 0.47% of the operating revenue of the company for the year 2014 under the PRC accounting standards.

Guizhou is a province of the People's Republic of China located in the southwestern part of the country. Its provincial capital city is Guiyang, other cities include: Anshun, Kaili, Zunyi, Duyun, Liupanshui and Qingzhen. Overall Guizhou is a mountainous province however it is more hilly in the west while the eastern and southern portions are relatively flat.

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