Notice by the Nansha District Bureau of Transportation of Guangzhou Municipality and Nansha District Bureau of Finance of Guangzhou Municipality on Issuing the Management Measures for the Financial Subsidy Funds for the Public Transport Industry of Nansha District (2021 Revision)

Management Measures for the Financial Subsidy Funds for the Public Transport Industry of Nansha District (2021 Revision)

Chapter I General Provisions

Article 1 These measures are formulated in light of the reality of Nansha district, for the purposes of boosting the healthy and sustainable development of the public transport industry and urban transport system of Nansha district, enhancing the efficiency of financial subsidy funds, and continuously improving the financial subsidy mechanism for PTI with an aim of improving the quality of public transport services. These measures are in accordance with the Guideline of the State Council on Prioritizing the Development of Public Transport in Cities (Normative Document No 64 [2012] of the State Council), the Regulation on the Management of Buses and Trams in Cities (Order No 5 of 2017 of Ministry of Transport), the Implementation Opinions of the People's Government of Guangdong Province on Prioritizing the Development of Public Transport in Cities (Normative Document No 120 [2013] of the People's Government of Guangdong Province), the Notice of Guangzhou Municipal Bureau of Transportation on Issuing the Suggestions of Implementing the 'Outline of Building a Country with Strong Transportation' (Normative Document [2019] No 491 of the Guangzhou Municipal Bureau of Transportation), and the Notice of the Office of Guangzhou Leading Group of Transportation on Issuing the Work Plan for Enhancing Metropolitan Public Transport of Guangzhou (Normative Document No 7 [2020] of the Office of Guangzhou Leading Group of Transportation).

Article 2 The "PTI financial subsidy" mentioned herein refers to the special funds arranged by Nansha district bureau of finance to make up for the losses caused by policies such as the operations of public transport at low-fare, which is given to public transport companies as full compensation on the basis of the cost and income regulations as well as performance assessment.

Article 3 These measures apply to the companies that operate public transport in Nansha district and hold the License of Public Transport Operation of Guangzhou issued by the municipal and district competent transportation departments. The routes in operation should be within the district or inter-districts routes owned by the district.

Article 4 The "cost and income regulation system" mentioned herein refers to the process implemented by relevant government departments to measure and calculate the standard cost of public transport enterprises through the reasonable definition of the scope of PTI operation cost and the reasonable creation of the standard for unit operation cost; examine and clarify the standard income of public transport enterprises through the reasonable definition of the scope of PTI operation income, thereby measuring and calculating the PTI financial subsidy with reference of the standard cost and income of all public transport enterprises.

Chapter II Constitution of PTI Financial Subsidy

Article 5 PTI financial subsidy granted by the Nansha district bureau of finance refers to the difference between a public transport enterprise's standard cost expanded at a cost-profit coefficient of three percent, and its standard income that has been adjusted on the basis of the performance assessment. The formula is as follows:

PTI financial subsidy = standard cost × (1+3%) - standard income + amount adjusted on the basis of the performance assessment.

Article 6 The PTI financial subsidy shall follow the principle of "reasonable regulation, facts-based verification, balancing responsibilities, interests, and appropriate investigation."

Chapter III Standard Cost

Article 7 The standard cost of a public transport enterprise is composed of the direct operational cost, expenses, value-added tax (VAT) and surcharges, and other costs subject to standardized costs. The above costs are calculated based on the cost standard indicators and these Measures  with due consideration to the realities and the measures of other cities.

1. Direct operational cost includes: staff salaries, fuel and electricity, maintenance and repair, tire consumption, vehicle insurance premiums, loss caused by accidents, depreciation and amortization expenses, operational business expenses, etc.

(1) Staff salaries: the fees, costs and expenses incurred by staff directly or indirectly who are engaged in the public transport business.

(2) Fuel and electricity: the costs of the fuel and electricity consumed for public transport vehicles.

(3) Maintenance and repair: the expenses for the maintenance and repair of public transport vehicles, excluding the wages and welfare benefits of the repairmen.

(4) Tire consumption: expenses for the tires consumed for public transport vehicles.

(5) Vehicle insurance premium and loss caused by accidents: the premium for the insurance taken out for public transport vehicles and the fees used to make up for the difference between the loss costs caused by an accident for which the operating enterprise is not liable and the amount of insurance claim settlement.

(6) Depreciation and amortization expenses: the expenses for depreciation of fixed assets and amortization of intangible assets related directly or indirectly to public transport. For the fixed assets or intangible assets that are unrelated to public transport or provided by the government for free, their depreciation or amortization are not included into the standard cost.

(7) Operational business expenses: other expenses for the public transport vehicles.

2. Other expenses include fees for management and financial expenses.

(1) Management fees: the expenses that a public transport enterprise uses for organizing and managing public transport, excluding labor costs.

(2) Financial expenses: expenses incurred by a public transport enterprise to raise the funds necessary for the operation of public transport.

3. VAT and surcharges: the VAT, urban maintenance and construction tax and education surcharge paid by a public transport enterprise for operation of public transport.

4. Other operational costs: other costs and expenses incurred by an enterprise in relation to the operation, including non-operating expenditure (such as the net loss of scrapped fixed assets).

5. The single-item operation expenditure on the purchase of operating vehicle(s), large equipment and equivalent; (annual) bus site rent, site repair cost (once), and (annual) services outsourcing (such as security and cleaning) fees that exceed 100,000 yuan shall be examined and approved by the competent transportation department before being included into the standard cost.

6. The following expenses shall not be included into the standard cost and shall be borne by the enterprises:

(1) Expenses incurred by non-continuous and non-normal activities of an operator.

(2) Expenses that are irrelevant to public transport services.

(3) The net losses caused by the inventory loss, damage, nonuse and the sale of fixed assets. Notwithstanding the foregoing, the net losses caused by the disposal of fixed assets that have reached the end of their service life and that are scrapped early due to policy requirements may be included into the standard cost upon approval by the competent transportation department of the district.

(4) The late fee, penalty and fines imposed by any government department.

(5) Expenditure on sponsorship and donations.

(6) Expenses incurred when a company purchases fixed assets that shall be reported to a superior competent department for verification or approval according to relevant regulations, and the purchase thereof exceeds the approved scale (depreciation and repair costs, interest of loans, etc.).

(7) The management fees with a nature of profits that are turned over to the superior company or administrative department, or the expenses paid on behalf of the superior company or administrative department, the distributed profits paid to investors, and the subsidy disbursement to affiliates.

(8) The expenses that are related to bus operation activities, but are compensated for by special funds.

(9) All types of reserves drawn.

(10) Expenses that shall not be included into cost under national regulations and other unreasonable expenses.

Article 8 Cost standard indicators are the controlling indexes that assess the cost-efficiency of public transport enterprises. Apart from financial expenses, VAT and surcharges and non-operational expenditure, the costs are regulated through setting standard values or value scope of cost standard indicators. More details are given in Appendix 1.

(1) The standard indicators of staff salaries include the average salary, person-to-vehicle ratio and the withdrawal ratio of the five funds (employee welfare benefits, trade union fee, employee education funds, social security fee and housing provident funds) of the personnel.

(2) The standard indicator of fuel and electricity costs refers to fuel (gasoline, electricity and gas) and power costs incurred every 100 kilometers based on different types of vehicles.

(3) The standard indicator of maintenance and repair costs is the maintenance and repair costs incurred every 1,000 km based on different types of repair.

(4) The standard indicator of tire consumption costs is the tire consumption costs incurred every 1,000 km.

(5) The standard indicator of insurance premium is the annual insurance premium per vehicle; that of loss caused by accidents is accident loss incurred every 1,000 km.

(6) The standard indicator of depreciation and amortization costs is the costs incurred by the depreciation of fixed assets or the amortization of intangible assets.

(7) The standard indicator of operational business fees is the fees for operation incurred every 1,000 km.

(8) The standard indicator of management fees is management fee ratio, i.e. the proportion taken up in the total cost of public transport operations excluding the manpower cost of administration staff, business reception costs and taxes under national regulations.

(9) The standard indicator of financial expenses is to be checked and decided with comprehensive and reasonable considerations given to the debt ratio and the financing cost.

(10) The standard indicators of VAT, surcharges and non-operational expenditure are to be checked and decided on the basis of facts, deducting the expenses that are irrelevant to public transport operations.

Chapter IV Standard Income

Article 9 The standard income of public transport enterprises includes: operational income, other net business income, net investment revenue, non-operational income and single-item financial subsidies from the government, excluding the income from the PTI subsidy of Nansha district. The formula is as follows:

Standard income=operational income + other net business income + net investment revenue + non-operational income + single-item financial subsidies from the government

Article 10 The components and formulation methods of the standard income of public transport enterprises are as follows:

1. Operational income: ticket income of public transport enterprises. This item is determined on the basis of the results of financial audit.

2. Other net business income: net income other than ticket income that is earned by a public transport enterprise by using public transport resources (such as vehicles, sites and stations) after deducting other business expenditure. It includes the net income gained from non-operational business, e.g. repair outside the company, training, leasing and advertising, which is turned in by a public transport enterprise and its affiliated companies. This item is determined on the basis of the results of financial audit.

3. Net investment revenue: the net amount of the investment made by a public transport enterprise after deducting the investment loss, if any. This item is determined on the basis of the results of financial audit.

4. Non-operational income: all types of income earned by a public transport enterprise and has no direct relation with its business operations, including liquidation of fixed assets, fines and other net non-operational income. This item is determined on the basis of the results of financial audit.

5. Single-item financial subsidies from the government: social insurance subsidy, subsidies from superior governments such as the national oil price subsidy for city buses, operation subsidy for new energy buses, municipal subsidy for inter-village buses, etc. In this item, the governmental subsidies for fixed assets and intangible assets are included into standard income on the basis of the actual amortization of the year. The deferred income in the upcoming years is not included.

Chapter V Performance Assessment

Article 11 The performance assessment of public transport enterprises includes two parts: the assessment of basic operation and the assessment of service quality. The former aims to make sure that a public transport enterprise can provide the public transport service required by the government, the results of which will decide the adjustment amount of the assessment of basic operation; the latter aims to encourage public transport enterprises to enhance the quality of public transport service by improving operation management, the results of which will decide the adjustment amount of the assessment of service quality. The sum of the adjustment amounts of the two assessments is the adjustment amount of the performance assessment.

Article 12 The basic operation will be assessed against six key indicators: operating mileage, the punctuality of departures, runs of the planned operations, vehicle population, person-to-vehicle ratio, violation of traffic law, and accidents. See Appendix 2 for the specific assessment method. The following is the formula of calculating the adjustment amount of the basic operation assessment of public transport enterprises:

Adjustment amount of the basic operation assessment = refunded amount of the subsidy for the basic operation assessment – temporarily withheld amount for the basic operation assessment

Temporarily withheld amount of the subsidy for basic operation assessment = appropriated amount of the PTI financial subsidy in the current period × withholding coefficient for basic operation assessment

Refunded amount of the subsidy for basic operation assessment = temporarily withheld amount of the subsidies for basic operation assessment × refunding proportion

The assessment results of the enterprises in the current period are relied upon to determine the withholding coefficient and calculate the temporarily withheld amount of the subsidies for basic operation assessment; the assessment results in the next period are relied upon to determine the proportion of the subsidies refunded for basic operation assessment and calculate the amount to be refunded. When the company conducts the annual liquidation, the "appropriated amount of the PTI financial subsidy in the current period" in the above formula is replaced with the standard loss in the current period.

Standard loss in the current period = standard cost in the current period - standard income in the current period

Article 13 The assessment of service quality includes: the check of management quality, service facilities, passenger experience, etc. See Appendix 3 for the specific assessment method. The adjustment amount for assessment of the service quality of public transport enterprises uses six percent of the total standard cost as the base. The adjustment amount for assessment of service quality is linked to the results of the assessment through the adjustment coefficient of service quality. See Appendix 3 for the method of determining the adjustment coefficient of service quality. The following is the formula of calculating the adjustment amount for the service quality assessment of the subsidy for the standard losses of the enterprises:

Adjustment amount for service quality assessment = appropriated amount of the PTI financial subsidy in the current period × (6%× adjustment coefficient of service quality - 6%)

When the company conducts annual liquidation, the "appropriated amount of the PTI financial subsidy in the current period" in the above formula is replaced with the standard cost in the current period.

Chapter VI Task Division

Article 14 The competent departments of transportation, finance, and price, implement the specific tasks within their own duties.

1. The district's department of transportation is responsible for compiling the budget of the PTI financial subsidy; collect the operational data of public transport enterprises and carry out the performance assessment; apply for the appropriation of the PTI financial subsidy in phases and make primary examination; take the lead in setting the standard for the standard cost of PTI; organizing the special audit of the operational cost and income of public transport enterprises as well as the standardization of the cost and income; calculating the amount of the PTI financial subsidy on the basis of the audit results, cost and income regulation outcome, and the performance assessment.

2. The district's department of finance is responsible for arranging the budget of the PTI financial subsidy; checking, ratifying and appropriating the PTI financial subsidy application submitted by the department of transportation.

3. The district's department of price regulation is responsible for jointly setting the standard for the standard cost of the PTI with the department of transportation.

Chapter VII Work Procedure

Article 15 Before the end of every November, the department of transportation shall compile the budget of the PTI financial subsidy for the next year on the basis of the liquidation results of the PTI financial subsidy from the previous year, the development of PTI and the budgets for the next year of the public transport enterprises. The budget should be submitted for approval and incorporated into the fiscal budget of the district according to the prescribed procedure. After the fiscal budget of the district is approved, the district's department of finance shall promptly allocate the budget of the PTI financial subsidy to the district's department of transportation.

Article 16 With the annual budgetary arrangement for the PTI financial subsidy in consideration, the district's department of transportation shall apply for the appropriation of the subsidies according to the prescribed procedure at the beginning of each quarter. The amount to be appropriated shall, in principle, not exceed 25 percent of the total annual budget of the PTI financial subsidy (the amount may be lifted to no more than 35 percent of the total budget of the expenditure of the enterprises has increased notably in a quarter due to the implementation of some policy), which shall be determined after the adjustment made on the basis of the performance assessment results. The appropriated amount of the liquidated funds of the PTI financial subsidy in previous years is immune to the restriction of the above percentage.

Article 17 The district's department of transportation entrusts a third-party to assess the performance of the public transport enterprises every quarter to calculate the adjustment amount for the basic operation assessment and service quality, providing the evidence for appropriated amount adjustment of the PTI financial subsidy in the following quarters.

Article 18 Every year the district's department of transportation entrusts a third-party to conduct special audit of the operational cost and income of public transport enterprises. The third party should calculate and ratify the enterprises' standard cost and income and carry out the annual liquidation of the PTI financial subsidy according to the standard for the standard cost of PIT and the performance assessment results.

Article 19 The district's department of transportation, together with the departments of finance and price, compiles (or revises) the standard for the standard cost of PTI once a year by referring to the cost regulation of PTI in the previous year, which will be the reference for checking and ratifying the standard income of public transport enterprises.

Article 20 The district's department of finance shall examine and verify the applications for the PTI financial subsidy before the allocation according to the state treasury management system.

Article 21 Upon receipt of the financial subsidy funds, the public transport enterprises shall carry out proper accounting based on the current accounting system.

The expenditure for hiring a third-party institution in Article 17 and Article 18 shall be disbursed from the PTI financial subsidy.

Chapter VIII Handling of Rules Violation

Article 22 All public transport enterprises shall cooperate with the district's departments of transportation, finance, price and audit in industry management, financial audit and supervision. The enterprises shall be responsible for the authenticity, legality and completeness of the materials submitted.

Article 23 The district's departments of transportation, finance, and price shall inspect and verify any violations and reach an audit conclusion before dealing with the violations as below:

1. If any enterprise of individual hides the income from public transport fare, or transfers any operational route without authorization, or violates Article 21 hereof, the appropriation of the financial subsidy funds shall be suspended until qualified correction is made;

2. If any enterprise delays the salary payment to its employees and the costs of fuels, materials, repair, or if any problem occurred is exposed by the media and negatively affects the society and stability, the appropriation of the financial subsidy funds shall be suspended until qualified correction is made;

3. For an enterprise that does not execute the emergency dispatching instruction of the government, its subsidy funds will be withheld or reduced for three months;

4. If any enterprise, without authorization, changes the public transport routes or service standard or charge the fare not in accordance with the ratified ticket price, and if any enterprise has committed the above acts three times (days) in a year on a single route, its financial subsidy funds will be withheld or reduced for one month until the recovery of the route operation;

5. For an enterprise that has provided false data and materials, the appropriation of the financial subsidy funds shall be stopped and the granted subsidy funds shall be recovered;

6. For an enterprise that refuses to comply with the public transport fare discount and the government's green policies, the appropriation of the financial subsidy funds shall be stopped until its qualifications for financial subsidies is cancelled;

7. For an enterprise that otherwise violates any laws and regulations, the financial subsidy funds shall be suspended, withheld, reduced or stopped as the case may be until the cancellation of its qualifications for financial subsidies.

Chapter IX Supplementary Provisions

Article 24 These measures shall take effect on the date of promulgation and shall remain in force until Dec 31, 2023. These measures shall be used as reference for the period from Jan 1, 2021 to the starting date of the implementation. Six months prior to expiry, these measures will be evaluated and revised in accordance with laws based on the implementation.

Article 25 These Measures are interpreted by Nansha district bureau of transportation of Guangzhou municipality.

Form of Disclosure: Active Disclosure