An Empirical Study On The Influence Of PPP On The Operation Performance Of Public Utility

In order to speed up the investment,construction and operation of public utilities in China,the PPP mode(Public-Private Partnership)was adopted to encourage private capital to invest in public utilities.It had a profound impact on the development and performance of public utilities in China.This study revealed that the PPP mode affected public utilities performance in the Chinese context,which was caused by the deep involvement and cooperation between the public sector(the local government)and the sponsor(private capital).There were three reasons: firstly,the equity financing of PPP might cause the divergence of institutional logic on the SPVs(Special Purpose Vehicles),from the assistant of local officials’ tournament mode to the profit seeking mode,with the characteristics of public utilities in Chinese context.Secondly,the formal contracts and the relationship contracts between the local government and the sponsors were formed in PPP mode.And thirdly,the resource capacity of the sponsors,such as capital and management and technology,also influenced the performance of SPVs.In order to release the ownership classification in past research on privatization of public utilities could not depict the difference of the institutional logic,the contractual relationship and the resource capacity among SPVs,the SPVs were classified with two important characteristics of "state-owned" and "IPO(Initial Public Offerings)" according to the institutional logic,contractual relationship and resource capacity.the hypotheses of financial performance,service performance,production technology performance and price with different stakeholders in PPP were put forward.The time series data of the 150 enterprises in water supply industry from 2002 to 2012 and 1971 enterprises in wastewater industry from 2008 to 2014 were tested with Stochastic Frontier Analysis(SFA)and Data Envelopment Analysis with Malmquist index(Malmquist-DEA),analysis of variance and regression analysis.The results showed that: firstly,compared with the traditional state-owned companies without IPO,the SPVs’ financial performances were significantly improved;however,different types of promoters caused different financial performance;the SPVs with local state-owned promoter with IPO had the best financial performance;the SPVs with non-local state-owned promoter also had better financial performance than the traditional state-owned companies without IPO.Secondly,the service performance and the production technology performance of public utility enterprises had been greatly improved in recent years because of the government’s mandatory regulation and the technological progress of the industry.However,the SPVs had not comparative advantage in the service performance and the production technology performance due to the decoupling of service performance and productive technology performance from the financial benefits of the promoters.And thirdly,the actual institutional logic of the current public utilities pricing was a "halo dyeing mode",which explained the "convergence" of price adjustment,which the adjustment of urban water price imitated the growth of water price in surrounding major cities.This mode provided the basic conditions for the SPVs to implement a higher monopoly price.Compared with other SPVs,the SPVs with local state-owned promoters with IPO and the SPVs with foreign Promoters had significant increased the price of public utilities in the local region.This paper identified the conceptual framework of every P in PPP,and constructs the theoretical framework of PPP mode’s impact on performance,and verified the impact of performance from different stakeholders,and proposed a "halo" model of public utility pricing.