BT projects under government procurement procedure

Given that the legislation in the infrastructure concession sector is dated, certain local governments, with a view to providing valid legal basis for BT (build-transfer) concession financing projects, have referred to the Government Procurement Law and used the government procurement procedure to select BT investors, concluding that if the government procurement procedure is used, it is unnecessary to require the government party to provide buyback security. However, is the law fully applicable to BT projects? Does the inclusion of BT projects in the scope of government procurement mean that the investments of investors are effectively protected? This column examines these questions.

Applicability issues

Although there is some similarity between BT projects and government procurement projects in terms of the source of the funds, as BT projects are a new model for investment in and financing of infrastructure, they were not considered when the law was being drawn up.

BT projects do not fall within the scope of government procured “construction projects”

In contrast to the average construction projects contemplated in the law, BT projects go beyond the simple construction sector, combining investment/financing with construction, in being a model for infrastructure investment/financing and construction. The definition of the scope of construction projects that are the procurement targets contemplated in the law is limited solely to the construction of the projects and does not cover the investment in and financing of construction projects.

Wang Jihong is the managing partner of V&T Law Firm. She practises in the field of infrastructure development. Xie Yi is a partner at V&T Law Firm.

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