▲ Minxian Hongyuan Clean Heating Co., Ltd
Chief reporter of Red Star News | Wei Xing from Min County, Gansu Province
Edited by He Xianfeng Edited by Li Binbin
"This is illegal robbery, which makes me cold." On May 20, Zhang Yong, Chairman of Minxian Hongyuan Clean Heating Co., Ltd. (hereinafter referred to as "Hongyuan Company"), told Red Star News that he had invested more than 300 million yuan in heating projects in Minxian County before being deprived of the right to heat supply.
"The heat supply of Hongyuan Company can be said that the masses, departments and relevant companies cooperating with or providing services are extremely dissatisfied." On May 22, Liu Mingzhu, deputy director of Minxian Housing and Urban Rural Development Bureau, said in an interview with Red Star News, "We hired an appraisal company to appraise the assets of Hongyuan Company, which showed that its assets were 122 million yuan, but at present Hongyuan Company is only in the courts of Dingxi City and Minxian County, and the litigation amount is up to 160 million yuan, which has become insolvent."
In the process of mutual accusations, the "honeymoon period" of Hongyuan Company and Minxian Housing and Urban Rural Development Bureau has also become the past, entering the stage of tension. According to Red Star News, the case of Hongyuan Company suing Min County Government for administrative agreement has been accepted by Tianshui Intermediate People's Court of Gansu Province. It will be clear which is right and which is wrong.
From the "honeymoon period" in 2018 to the "divorce" now, the "gratitude and resentment" between Hongyuan Company and the Min County Government and relevant departments in Dingxi City, Gansu Province must start from six years ago
Honeymoon
"Franchise" for 30 years
May 20, Gansu. The Red Star News reporter met Zhang Yong, the chairman of Hongyuan Company. He provided the reporter with the Cooperation and Investment Agreement for the Central Heating Reconstruction Project in Minxian County Urban Area, the Franchise Agreement for Central Heating in Minxian County Urban Area and other materials. In August 2018, Minxian County Government authorized Minxian County Housing and Urban Rural Development Bureau (Party A) to sign the Franchise Agreement with Minxian County Hongyuan Clean Heating Co., Ltd. (Party B) Party A grants Party B the exclusive right to operate the heating business within the validity period of the agreement and the specified territory.
According to the Franchise Agreement, Party B, namely Hongyuan Company, enjoys the exclusive heating operation right in the old urban area of Minxian County (including the east bank of Diezang River), Xicheng District, Nancheng District and Beicheng District, from August 24, 2018 to August 23, 2048.
Zhang Yong was previously the president of Jiangsu Chamber of Commerce in Henan Province. On March 1, 2018, the staff of the Chamber of Commerce called him and said that there was a heating project in Minxian County. Zhang Yong knows that the heat supply project has a large initial investment, but once it is completed and has enough operation period, the later return will be good.
To this end, Zhang Yong and his friends came to Minxian County for field investigation. Zhang Yong said that at that time, the cooperation framework agreement was drawn up in May 2018 and the contract was signed at the Lanzhou International Trade Fair.
▲ Relevant Franchise Agreement
On June 27, 2018, Hongyuan started the ribbon cutting of its heating project in Minxian County. According to the materials provided by Hongyuan Company, after that, the company transferred 109 mu of state-owned land use right with 15 million yuan, invested nearly 160 million yuan to build a heat source plant, installed a 116MW circulating fluidized bed boiler and auxiliary equipment, environmental protection facilities, electrical automation control, chimney, coal shed and coal depot, coal gallery, central control room, office building, etc., with a total construction area of 42000 square meters.
"In addition, in order to solve the problem of severe aging of heating facilities in most of the old residential areas in Minxian County, the company invested about 200 million yuan to build and update more than 40 kilometers of pipe network covering the whole urban area, and built and renovated more than 20 heat exchange stations." Zhang Yong introduced that the demand for central heating in Minxian County urban area was basically guaranteed after upgrading.
On July 6, 2023, Hongyuan Company said in the Special Report on Issues Related to the Recovery of Our Heating Franchise by Minxian Housing and Urban Rural Development Bureau and the Taking Over of Our Heating Franchise by the County to the Minxian County Government that during the five years of operation, its investment was about 370 million yuan.
"After about 370 million yuan was invested, my company suddenly withdrew its franchise rights and transferred them to the companies under the Urban Investment Corporation. How can my legal rights and interests be protected?" Zhang Yong said.
"The heating price is set by the government, but the coal price is based on the market." Zhang Yong told Red Star News that when he took over in 2018, the local coal price was 580 yuan/ton, and then went up all the way. By 2020, the price had soared to 1900 yuan/ton.
"The investment in heating infrastructure is large and the recovery is slow, and it was hit by the epidemic shortly after taking over, with a cumulative loss of 116.5 million yuan in five years." Zhang Yong said, "As the epidemic receded, the company began to get on track, but the franchise rights were recovered and the company was sealed."
Divorce
"Franchise Rights" Discontinued in Advance
On June 13, 2023, a lawyer from a law firm in Gansu came to Hongyuan Company to post a lawyer's letter on the cancellation of the Franchise Agreement.
The lawyer wrote that, in view of the fact that your company (Hongyuan Company) is involved in many lawsuits, has high liabilities and is insolvent; The heating assets are sealed up, and there is a risk of judicial auction; The heat supply enterprise has difficulty in capital turnover and cannot maintain the normal operation of the heat supply company; Inadequate equipment maintenance, safety management and dishonest operation; The number of complaints from the public remains high, and people are extremely dissatisfied with the current situation of heat supply, and social conflicts are increasingly intensifying. According to the relevant laws and regulations of the Civil Code, the Ministry of Housing and Urban Rural Development, your company has violated the relevant laws and regulations and constituted a fundamental breach of contract... Your violations and breaches of laws and regulations have seriously affected the heat supply security of Minxian County, endangered the public interest, and will lead to the Franchise Agreement The contract purpose of cannot be realized.
Accordingly, the lawyer's letter issued by the above-mentioned law firm entrusted by Minxian County Housing and Urban Rural Development Bureau said, "As of the date your company receives this lawyer's letter, the Franchise Agreement signed between Minxian County Housing and Urban Rural Development Bureau and your company will be terminated and the central heating operation right will be withdrawn". Zhang Yong said that the company could not accept this.
Minxian County Housing and Urban Rural Development Bureau confirmed to Red Star News that the lawyer's letter sent by the law firm was due to the problems mentioned in the lawyer's letter.
▲ Notice of Housing and Urban Rural Development Bureau of Minxian County
On May 22, 2024, Liu Mingzhu, Deputy Director of Minxian Housing and Urban Rural Development Bureau, and relevant leaders and staff of the Publicity Department of the County Party Committee were interviewed by Red Star News. Minxian Housing and Urban Rural Development Bureau showed Red Star News the data of "Some people's problems and pictures of temperature measurement in their homes during the central heating period in Minxian urban area from 2022 to 2023", "This mainly proves that the heating quality of Hongyuan Company is not high." Liu Mingzhu said.
Minxian County Housing and Urban Rural Development Bureau also provided Red Star News with the Reminder on Completing the Letter and Visit Work for Heating this Winter and Next Spring issued by Minxian County Letters and Calls Bureau on May 8, 2023. The document shows that since 2020, there have been more than 100 complaints about heating from the masses (excluding complaints to the housing and construction departments), including 11 online complaints, 45 complaints coming to the petition hall, 22 group petitions, and 3 provincial and municipal petitions
Liu Mingzhu said that there were more than one thousand complaints from people to Minxian Housing and Urban Rural Development Bureau by phone, but the number of complaints in this regard in the whole county decreased by 96% after the city investment took over last year.
In addition, according to the Statement on Complaints about Wage Arrears of Minxian Hongyuan Thermal Power Co., Ltd., which was formed by Minxian Human Resources and Social Security Bureau on May 24, 2023, since 2018, the company has defaulted on wages of migrant workers in 21 cases, 139 people, with an amount of 2.53799 million yuan. The Human Resources and Social Security Bureau has repeatedly urged the company, but the other party refused to pay.
Minxian County Urban Construction Investment Management (Group) Co., Ltd. reported to Minxian County Housing and Urban Rural Development Bureau on May 9, 2023 that in August 2018, after Minxian County Hongyuan Cleaning Company and Minhai Heating Power Company (Zhang Yongren, senior manager) were responsible for urban heating, there were the following problems: Hongyuan Company used some assets of Tongyuan Heating Company, refused to sign an agreement Payment of lease fees...... The lease fee is RMB 34.1618 million based on the residual value of facilities and equipment; Of the 30 million yuan loaned to it by the urban investment company, only 1.14 million yuan of interest has been repaid by May 9, 2023, and the remaining principal, interest payable and liquidated damages of 36.816 million yuan have not been repaid; The water fee owed to the water supply company in Minxian County is 1166440.25 yuan.
On May 12, 2023, the Minxian County Market Supervision and Administration Bureau issued a Letter of Suggestion to Minxian County Housing and Urban Rural Development Bureau, pointing out that consumers' complaints against Hongyuan Company are prominent, such as the heating temperature is not up to standard; Stop heating at will; Ask for payment of late fees that do not conform to the actual situation
At the end of the Proposal Letter, Minxian Market Supervision Administration said: "Hongyuan Company has many problems, and people's livelihood problems that infringe on the interests of consumers are prominent. In order to fundamentally address people's livelihood problems and provide a better heating environment for the heating season of Minxian County from 2023 to 2024, it is recommended that your bureau strictly strengthen supervision, seriously investigate and deal with illegal acts, and change the operating body of the heating supply company when necessary. In order to comply with the public opinion, if conditions are available, it is best to regulate The government directly manages the heating livelihood project. "
"Which company, especially the service enterprises, can guarantee not to be complained about by others? Besides, there are many malicious complaints." Zhang Yong told Red Star News, "From the date, including complaints from relevant departments to our company, they are all concentrated in a certain period. What a coincidence?"
lawsuit
The case has been accepted by Tianshui Intermediate Court
At about 9:00 a.m. on July 12, 2023, the leading group of Minxian County urban central heating problem disposal led a team to Hongyuan Company to take over and seal up the assets of Hongyuan Company.
On July 27 of the same year, the People's Government of Minxian County announced that in order to meet the demand for central heating in the urban area of Minxian County and ensure the safe, stable and orderly operation of heat supply in 2023-2024, the county government agreed that the County Housing and Urban Rural Development Bureau should cancel the "Minxian County Central Heating Franchise Agreement" signed with Minxian Hongyuan Clean Heating Co., Ltd. and withdraw its franchise rights.
▲ Announcement of Minxian County People's Government
"When the Franchise Agreement is signed, the local government will give the investor certain preferential conditions to mobilize the enthusiasm of investors and protect their legitimate rights and interests." In an interview with Red Star News, Zhang Yong's attorney believes that such agreements are contractual, and the contractual characteristics are consensual, mutually selective and flexible, that is, when problems are encountered, both parties can negotiate and discuss, This is also stated in the agreement.
The reporter noticed that the "Termination of Franchise Rights" in Chapter XIII of the Franchise Agreement signed by both parties stated that this agreement can be terminated in advance after negotiation between Party A and Party B when either party deems it necessary. If no agreement can be reached through consultation, either party shall be obliged to continue to perform the obligations of this Agreement before termination according to the dispute resolution mechanism, and this Agreement shall not be terminated in advance without authorization.
The lawyer said: "If you think I'm not doing well, you can take over after discussion, instead of canceling or withdrawing the franchise right directly with a lawyer's letter, and then carrying out the so-called temporary takeover, which actually infringes the legitimate rights and interests of investors."
Red Star News learned that in May this year, Hongyuan Company sued Min County Government for administrative agreement, which was accepted by Tianshui Intermediate People's Court of Gansu Province. On the morning of May 22, Jiao Weizhong, Director of Minxian County Housing and Urban Rural Development Bureau, also confirmed the news to Red Star News, "it has entered the judicial process."
Liu Mingzhu, deputy director of Minxian County Housing and Urban Rural Development Bureau, said, "Zhang Yong said that he invested 370 million yuan for this purpose, but we asked a third-party evaluation company to evaluate 122 million yuan, which is right and which is wrong, and whether our relevant measures are legal. We believe in the court and respect the court's judgment."
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