Public-Private Partnership In Public Utilities And Equity Financing In Our Country

On Dec 27, 2002, construction department issued "the advice on accelerating marketization of municipalities' public utilities" , which provided policy guarantee for municipalities' public utilities to make use of private capital and foreign investment. From then, the public-private partnership in public utilities became a trend. Layers of governments are now gradually groping for how to utilize the trend that is public-private partnership in public utilities to adjust the financing strategy of public utilities in local areas and strengthen the municipal construction. Equity financing is not only a long-term and stable capital resource, but it can conduce to provide efficient incentive mechanism and establish standard enterprises' management structure. Therefore, equity financing is an important way to obtain long-term development for municipalities' public utilities. It is very important in the strategy adjustment to make good use of equity financing instrument in the process of public-private partnership in public utilities, extend financing resources and strengthen the reform of investing and financing in municipal construction.The unique characteristics of public utilities decided its feasibility and necessity. However, not all the public products could be provided by privatization. The privatization of public utilities should have some special qualifications. On one hand, the privatization of public utilities could help government to meet the increasingly capital demand of municipal construction; on the other hand, it could improve specific programs' efficiency of public utilities by introducing flexible operating mechanisms. As to our country which is in the elementary phase of socialistic market economy, introducing private capital and private enterprises' operating mechanisms playsan important part in solving the bottleneck of municipal construction' s capital as well as improving the operating efficiency of public utilities.