Based on information asymmetry and multiple identities of government in PPP public service projects, the possible collusion between government regulators and the project company is discussed considering different stages of the project implementation process. Under the premise of making reasonable assumptions on the behavior between government department and private capital in a water supply project, a game model among government department in charge, regulatory body and the project company is established. The main factors for the collusion are analyzed. Some precautions are proposed, including establishment of multi-stakeholder regulatory bodies and creation of competitive mechanism in procurement phase of social capital.