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Article 1. The present Measures are hereby formulated in accordance with the relevant state laws and regulations for the purpose of speeding up the market orientation of the municipal public utilities, regulating the franchising activities of municipal public utilities, strengthening market supervision, safeguarding the public interests and public security, and promoting the healthy development of the municipal public utilities. Article 2. The "franchising of municipal public utilities" mentioned in the present Measures shall refer to the system that the government chooses the investors or managers for municipal public utilities through market competition mechanism in accordance with the relevant laws and regulations, clarifying that they may deal in certain products of municipal public utilities or provide certain services within a certain period of time and scope. The present Measures shall be applicable to the implementation of franchising according to law of water supply, gas feed, heating, public traffic, sewage disposal, and the relevant industries. Article 3. The franchising projects shall be determined by the provinces, autonomous regions, and municipalities directly under the Central Government through legal forms and procedures. Article 4. The competent construction department of the State Council shall be responsible for guiding and supervising the franchising activities of municipal public utilities nationwide. The competent construction departments of the people's governments of provinces and autonomous regions shall be responsible for guiding and supervising the franchising activities of municipal public utilities within their administrative regions. The competent departments of municipal public utilities of the people's governments of municipalities directly under the Central Governments, cities, and counties shall, upon the authorization of the people's governments (hereinafter referred to the supervisory departments) be responsible for the specific implementation of the franchising of municipal public utilities within their own administrative regions. Article 5. The principles of openness, fairness, justness and priority of public interests shall be followed for implementing franchising of municipal public utilities. Article 6. The principles of rational overall arrangement, and effective allocation of resources shall be adhered to for implementing franchising of municipal public utilities, encouraging the share of municipal infrastructures surpassing the administrative regions. The principle of equality of the relevant parties concerned in negotiation shall be followed for trans-administrative regions franchising of municipal infrastructure, and supervisions shall be strengthened together. Article 7. The bidders taking part in the competitive bidding of franchise right shall meet the following requirements: (1) Being a legally registered enterprise legal person; (2) Having corresponding registered capital and establishments or equipment; (3) Having good bank credit, financial status and corresponding debt repayment capabilities; (4) Having corresponding practicing experiences and outstanding achievements; (5) Having corresponding number of employees in key posts such as technology, finance and management, etc.; (6) Having practical and feasible management plans; and (7) Having other conditions prescribed in the local rules and regulations. Article 8. The supervisory departments shall choose investors or managers in accordance with the following procedures: (1) Putting forward franchising projects of municipal public utilities, after reporting them to the people's governments of municipalities directly under the Central Governments, cities, or counties for approval, releasing the conditions for public bidding to the general public openly, and accepting tender; (2) Making examination and pre-examination on the qualifications of the bidders of franchise right on the basis of public bidding conditions, and recommending qualified candidates for the bid; (3) Organizing the appraisal committee to make appraisal according to law, and choosing the excellent party to win the franchise right through inquiry and making an open reply; (4) Making a public announcement on the bid winner, the time for the announcement shall be no less than 20 days; and (5) At the expiry of the public announcement, if there is no objections to the bid-winner, it shall sign the franchise agreement with the bid-winner (hereinafter referred to the "enterprise gaining the franchise right") upon the approval of the people's governments of the municipalities directly under the Central Governments, the cities, and the counties. Article 9. The franchising agreement shall include the following contents: (1) The contents, area, scope and period of validity of the franchising; (2) The standards for the products and services; (3) The methods or standards for determination of the price and charges, and the adjustment procedures thereof; (4) The ownership and disposal of the facilities; (5) The maintenance and renovation and reconstruction of the facilities; (6) Security management; (7) Guarantee for performance of contract; (8) Termination and alteration of the franchise right; (9) Liabilities for breach of contract; (10) Ways of dispute resolution; and (11) Other matters that shall be stipulated believed necessary by the two parties. Article 10. The supervisory departments shall perform the following duties: (1) Assisting the relevant departments to make business accounting and monitor the cost of the enterprises, and putting forward opinions of price adjustment; (2) Supervising enterprises that have obtained the franchise right over their performance of legal obligations and duties stipulated in the agreement; (3) Supervising the enterprises that have obtained the franchise right over their implementation of business plans, quality of products and services, and the work safety thereof; (4) Accepting and handling the complaints of the general public on enterprises with franchise right; (5) Submitting annual report on supervision over and inspection on franchising to the governments; (6) Under the emergency circumstance that endangers or may endanger the public interests or public security, taking over the franchise projects temporarily; and (7) Other obligations stipulated in the agreements. Article 11. Enterprises that have obtained the franchise right shall perform the following obligations: (1) Making scientific and reasonable annual production and supply plans of the enterprises; (2) Organizing the safety production of the enterprises in accordance with the state work safety laws and regulations and the standard criterions for industry work safety; (3) Performing business agreements to provide sufficient and qualified products and services to the society; (4) Accepting supervisions and inspection of the competent departments in charge on the quality of products and services; (5) Putting on records the medium and long term development plans, annual business plans, annual report and the resolutions of the board of directors at the competent departments in charge within the prescribed time limit; (6) Strengthening maintenance and renovation and reconstruction on the running of production establishments or equipment to ensure that the establishments be in good condition; and (7) Other obligations stipulated in the agreement. Article 12. The term of franchising shall be determined according to factors such as the character, scale, and ways of operation of the industry, and etc.; the maximum term shall not exceed 30 years. Article 13. Where the enterprises that have obtained franchise right cause economic losses due to undertaking the mandatory welfare task of the government, the government shall give compensation to them accordingly. Article 14. Where during the period of validity of the agreement, if there is necessity to alter the contents of the agreement, the two parties of the agreement shall sign a supplementary agreement on the basis of negotiation together. Article 15. Where an enterprise that has obtained the franchise right really needs to alter its name, address, or legal representative, it shall notify beforehand the competent departments in charge in writing, and gain their approval. Article 16. At the expiration of the franchising term, the competent departments in charge shall organize a public bidding to choose the franchising managers in accordance with the procedures prescribed in the present Measures. Article 17. Where an enterprise that has obtained franchise right proposes to cancel the agreement unilaterally within the period of validity of the agreement, it shall file an application in advance, and the supervisory departments shall give a reply within three months after receiving the application of the enterprise. The enterprise that has obtained the franchise right shall ensure the ordinary operation and service before the supervisory departments approve to cancel the agreement. Article 18. Where an enterprise that has obtained franchise right has any of the following acts during the franchising period, the supervisory departments shall terminate the franchising agreement according to law, cancel its franchise right, and may also take it over temporarily: (1) Transferring or leasing franchise right without authorization; (2) Making disposal or mortgage on the property they operate without authorization; (3) Grave quality or work safety accidents occurred due to poor management; (4) Shutting down or going out of business without permission, which seriously influences the public interests and security; or (5) Other acts prohibited by laws and regulations. Article 19. Where the franchise right is altered or terminated, the supervisory departments shall take effective measures to ensure the continuity and stability of supply and service of the municipal utility products. Article 20. The supervisory departments shall, within 30 days after signing the franchising agreement, report it to and put it on records at the upper level departments in charge of municipal public utilities. Article 21. During the process of operation of the projects, the supervisory departments shall organize the relevant experts to make middle-term appraisal on the business operation of the enterprises who have obtained the franchise right. The period of the appraisal shall be no less than two years in general, and an annual appraisal may be carried out under special circumstances. Article 22. The relevant departments of the people's governments of the municipalities directly under the Central Governments, cities, and counties shall, according to the principles and procedures prescribed by the relevant laws and regulations, examine and approve and supervise the price of the municipal utility products and services. Article 23. No enterprises that have obtained the franchise right may shut down or go out of business at will without the approval of the people's governments of the municipalities directly under the Central Governments, cities, or counties. In case the enterprises that have obtained franchise right shut down or go out of business without permission, the supervisory departments shall order them to correct within a prescribed time limit, or take effective measures to urge them to perform duties according to law. Article 24. The supervisory departments shall not obstruct the ordinary production and operation activities of the enterprises that have obtained the franchise rights when implementing supervision and inspection. Article 25. The supervisory departments shall establish preparatory plans to meet the emergency of temporary takeover of the franchising projects. Where the supervisory departments have cancelled the franchise right of an enterprise that has obtained the franchise right and implement temporary takeover on it, they shall process in accordance with the provisions of the relevant laws and regulations, and convene a hearing. Article 26. The general public shall have the right to know or suggest concerning the franchising of municipal public utilities. The people's governments of the municipalities directly under the Central Governments, cities and counties shall establish a mechanism of participation by the general public, so as to ensure that the general pubic be able to make supervision over the franchising conditions. Article 27. The competent construction department of the State Council shall strengthen supervision over and inspection on the implementation of franchising activities by the competent departments of the municipal public utilities of the municipalities directly under the Central Governments. And the competent construction departments of the people's governments of the provinces and autonomous regions shall strengthen supervision over and inspection on the implementation of franchising activities by the competent departments of municipal public utilities of the people's governments of the cities and counties, and correct in time the illegal acts in the implementation of franchising. Article 28. The supervisory departments shall cancel the franchise right of an enterprise who obtains the franchise right by illegal means such as cheating or bribery, and report to the competent construction department of the State Council, who shall then reveal this openly to the general public through media and other ways. And the enterprise whose franchise right is cancelled shall be prohibited from taking part in the competitive bidding for franchising of municipal public utilities within 3 years. Article 29. Where the supervisory departments or the enterprises that have obtained the franchise right are in breach of the agreement, the party who has faults shall undertake the liabilities for breach of faith, and shall bear the compensation liabilities if it leads to the damage of the other party. Article 30. In case the supervisory departments and their staff members have any of the following circumstances, the people's governments or supervisory organs of the municipalities directly under the Central Governments, cities and counties who give them authorization shall order them to correct, and impose administrative punishments according to law on the main responsible person and other persons directly liable. In case they commit a crime, they shall be prosecuted for criminal liabilities according to law: (1) Failing to perform supervision duties according to law or failing to do their best to make supervision, which lead to serious consequences; (2) Granting franchise rights to those bidders not meeting the legal requirements; or (3) Misusing authority to practice fraudulent acts for private gains. Article 31. The present Measures shall be implemented as of May 1, 2004. |
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