Feasibility Study On PPP Project Financing Mode In Metro Construction

Hangzhou Metro construction will be expending to a total of 196 km subway lines in 2022, with combined investment approximately 221.9 billion yuan and aroud 31.7 billion yuan per year on average. However, a big contradiction between insufficient funds and huge demands in subway construction, which limits the current subway advancement, could bring considerable financial pressures to government. For instance, there are some significant limitations existing in subway construction on the aspect of financing sources such as fiscal government investment, bank loans and corporate bonds. According to the currency in Hangzhou, a variety of active exploration and practice in financing methods have been taken to replace the single mode of government investment and then to promote the metro construction, especially PPP project acting as an efficient proposal.This paper is an applied research paper, which is to study the problems encountered in the practical application of PPP project financing mode in the metro construction,for the program or proposal for the follow-up study to provide reference or reference.This paper firstly distinguishes the difference between metro and other rail transportation. Secondly, it analyzes the application of PPP project on metro construction especially expresses the difference between such project and other traditional models. Moreover, this article demonstrates what the outstanding factors make the model successfully through typical cases in the domestic and at the a-board. According to the status on the Line No.5, three main problems are then proposed with utilizing the PPP project such as the risk-allocation problem between franchising companies and government, the assimilation-capacity issue of government subsidization and the creation puzzle of coordination mechanism. Finally, several evidences are provided to show the feasibility of PPP project in Line No.5 in Hangzhou, which contributes to theoretical and realistic significance in further investigations in the PPP project utilized into comprehensive metro construction.