Edited by the Water Policy Research Center of the Environment Department of Tsinghua University, this comprehensive report on the Chinese water sector is a collection of findings from recent research conducted by the Center and government consultancy reports. The report presents an overview and analysis of the current situation of the reform of the Chinese urban water sector. This is followed by case studies and appraisals on 17 water industry reform measures collected by the authors in 14 cities. The report then examines key problems of the current water industry reform. The comprehensive scope of this report, the level of detail, as well as the authors’ insights together make this document a unique reference on China’s water industry, as well as an important guide to the future of China’s water management.
The book will be extremely useful for public utility reform in China and in other countries. It will therefore be of particular value to government departments, policy advisors, consultants, financing bodies, and utility service providers.
The report is part of the Water21 Market Briefing Series. Titles in the series provide more focused insight into aspects of the international water sector.
About the authors: Dr Tao FU is Director of the Water Policy Research Center, Tsinghua University, Beijing, P.R. China. Dr Miao CHANG is Senior Research Fellow at the Water Policy Research Center, Tsin
Chapter
Total water supplied and types of use
The total water supply production capacity and unused capacity of China’s water supply facilities
Per capita residential consumption per day
Length of water supply pipeline
1.2 China’s wastewater treatment industry: the construction situation
1.2.1 The four phases of development in China’s wastewater treatment
1.2.2 Analysis of the development of China’s urban wastewater treatment industry in the past decade
Annual wastewater discharge, annual treated wastewater and annual wastewater treatment rate
Wastewater treatment capability
Construction of wastewater treatment plants
1.2.3 Development of the recycled water industry in China
Chapter II - Background and need for China’s urban water sector marketisation
2.1 The backdrop of urban water marketisation
2.1.1 Political background to the reform of the water industry
2.1.2 The international background to water industry reform
2.1.3 The policy background to water industry reform
2.1.4 The financial background to water industry reform
2.1.5 Industrial background of water industry reform
2.2 Two motives for China’s urban water sector marketisation
2.3 The need for China’s urban water sector marketisation
2.3.1 Urban water sector is the basis for realising the goal of building a prosperous society
The rapid increase in urbanisation requires major growth in coordinated infrastructure capability
Environmental pollution increases the demand for environmental infrastructure
2.3.2 Marketisation is the direction taken by China’s urban water sector reform in the 21st century
The government agrees with the direction of marketisation
A market mechanism is introduced to improve quality of service, increase construction capital and improve operation and management efficiency
Chapter III - Progress of China’s urban watersector marketisation reform
3.1 The three phases of China’s urban water sector marketisation reform
3.1.1 Urban water sector reform is advancing by trial and error
3.1.2 Features of the third phase of urban water sector reform
3.2 Progress of China’s urban water sector marketisation projects
Post-reform solely state-owned
Joint venture and partnerships
3.2.2 Analysis of water sector marketisation projects across the provinces
The varying progress of reform across the country
Municipalities directly under the control of the Central government: enough capital; slow reform; mainly large projects.
Northeast areas: slow reform; small and medium projects
Middle and western areas: inadequate capital; anxious local government
Coastal areas: pioneer of the marketisation reform
Analysis of the scale of water supply reform projects
Water supply industry market-oriented reform model analysis and concession management
3.2.3 The situation of wastewater treatment marketisation projects in different provinces
3.2.4 Progress in constructing wastewater treatment plant BOT projects
Developments in the investment and construction of China’s urban wastewater treatment plants
Distribution of urban wastewater treatment BOT projects
Analysis of the scale of urban BOT wastewater treatment projects
Analysis of investment in urban wastewater treatment BOT projects and wastewater treatment price
Average wastewater treatment cost
Relationship between wastewater treatment cost and wastewater treatment fees
Chapter I. Analysis of the framework of reform for China’s urban water sector
1.2 Case analysis framework
Chapter II - The Chongqing Jiangbei Tap Water Company joint venture project
Population and administrative division
Water resource condition and water pollution problem
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
2.1.2 Main motives for reforming municipal public utilities
2.2 Project model and its characteristics
2.2.2 Project company profile
2.2.3 Project characteristics
Project progress and achievements
Granting concession rights
Service price and tariff adjustment formula
The principle of tariff adjustment
Determining reasonable cost
Regulation of water quality and service
Current water tariff regulation model
Prospective tariff regulation model
2.3 Project appraisal and lessons learnt
The funding model was innovative
Project financing did not increase the shareholders’ capital liability
Problems related to pipe network stockholding in the initial stage were avoided
The venture acquired more investments
Integrated management of both water treatment works and pipelines allowed the investors’ managerial expertise to be utilised
There is no sound water tariff forming mechanism
Policy adjustments have incurred unforeseen costs for the enterprise
Intentions between local governments and enterprises differed over the development plans and there were inflexible terms in the agreed plan
Chapter III. The Xuzhou Sanba riverwastewater treatment BOT project
Population and administrative division
Water resource conditions and water pollution problems
Construction of urban water infrastructure
Economic development and social condition
3.1.2 Main motives for reforming municipal public utilities
3.2 The project model and its characteristics
3.2.2 Project characteristics
Service price and tariff adjustment formula
Tariff adjustment formula
3.3 Project appraisal and lessons learnt
3.3.1 Proper pricing and collection of wastewater treatment fees is a prerequisite of effective wastewater treatment
3.3.2 Older-generation environmental protection projects can take off under sound regulation
3.3.3 Problems with construction and operational costs in medium and small-size wastewater treatment plants
3.3.4 Specific suggestions for the Xuzhou project
Chapter IV. The Xiamen Water Groupownership trading project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
4.1.2 Motives for reforming municipal public utilities
4.2 Project model and characteristics
4.2.2 Project company profile
The Xiamen Environmental Protection Water Treatment Company
The Xiamen China Environmental Protection Wastewater Treatment Company
4.2.3 Project characteristics
Granting concession rights
Service price and tariff adjustment formula
Redeployment of redundant labourers and the change of employee identity
4.3 Project appraisal and lessons learnt
4.3.1 Main appraisal and summary
Ownership trading complied with standardised bidding procedures
The first in China to hire a water service company as a financial consultant for a project
More focus on the overall strength of the bid winner
Special trading structure
4.3.2 Experience and lessons learnt
The divided system increased the management costs
More attention was given to capital than efficiency improvement
The advantages of the complementary Xiamen Water Service Group were not fully utilised
Chapter V. Market-oriented reform of theShenyang water supply industry
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
5.1.2 Main motives for reforming municipal public utilities
5.2 Project model and characteristics
5.2.1 No 8 Water Plant joint venture: the Sino-French Water Development Company (1995 to 1999)
5.2.2 BOT for No 9 Water Plant: Huijin Water Service (1996)
5.2.3 Management contract: Sino-French Water Development
5.2.4 Listing in Hong Kong stock market: Shenyang Public Utility Holding Company (0747-HK)
5.3 Project appraisal and lessons learnt
5.3.1 The urban water sector is different from general competitive industry
5.3.2 The lack of democratic decision-making mechanisms causes cursory decisions
5.3.3 Systems without a separation of governmental jurisdictions from enterprise operations will seriously hamper the marketisation reform
5.3.4 The urge to raise funds led to the signing of unequal agreements
Chapter VI. Shenzhen Water Group equity transfer project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
6.1.2 Main motives for reforming municipal public utilities
6.2 Project model and its characteristics
6.2.2 Joint venture profile
6.2.3 Project characteristics
Granting the concession right
Service price and tariff adjustment formula
6.3 Project appraisal and lessons learnt
The paradigm of total equity transfer in the urban water sector
A relatively sound regulatory system
Put the separation of government functions and asset management into practice
The company structure hindered the expansion of the scale of development
External investment was constrained by competition among shareholders
Disposal and management of assets in the water sector
Relationship between government regulator and enterprise
Chapter VII. Four market-oriented reformprojects in the Shanghai water sector
Population and administrative division
Water resource condition and water pollution problems
Construction of the urban water infrastructure
Economic development and social conditions
7.1.2 Main motives for reforming the municipal public utilities
Reform process of Shanghai’s investment and financing system
Reform of the management system of the Shanghai urban water sector
7.2 The Shanghai Zhuyuan wastewater treatment plant BOT project
7.2.1 Zhuyuan No 1 Wastewater Treatment Plant
Granting the concession right
Service price and tariff adjustment formula
7.2.2 Shanghai Zhuyuan No 2 wastewater treatment plant
Granting the concession right
Service price and tariff adjustment formula
7.2.4 Project appraisal and lessons learnt
Marketisation framework and cause and effect of project pricing
The government still has investment responsibilities under the market-oriented system
Effects of changes in policies on the project
It is important to choose the type of investors cautiously
The need for proper rules and regulations in the process of water sector marketisation
7.3 The Shanghai Dachang water plant BOT
7.3.2 Project company profile
7.3.3 Project characteristics
Granting the concession right
Service price and tariff adjustment model
7.3.5 Project appraisal and lessons learnt
A successful investment-attracting project
A model case for dealing with a project under policy changes
The repurchase once again introduced integrity into the water system
The BOT model is not suitable for the potable water sector
Analysis of the reasons why some international water companies exit the Chinese market
7.4 The Shanghai Pudong Tap Water Company equity transfer project
7.4.2 Project company profile
7.4.3 Project characteristics
Granting the concession right
Service price and tariff adjustment formula
7.4.4 Project appraisal and lessons learnt
Foreign investor’s strategic entrance into the pipeline and service
There are many factors in the high premium of the Pudong project
The project reflected the market value of system-wide operation in the urban water sector
Attempts to regulate full concessions by installing an official onto the company’s board
Promote the market-oriented reform of Shanghai’s urban water sector
The equal equity proportion leaves hidden trouble for management
Policy obstacles to a 50-year term of operation
A licence type joint venture increases the liability of investors
Profit will come given a little more time
Chapter VIII. The Ma’anshan water supply joint venture project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
8.1.2 Main motives for reforming the municipal public utilities
8.2 Project model and characteristics
8.2.2 Project company profile
8.2.3 Project characteristics
Project progress and achievements
To date, over CNY9.27 million ($1.22 million) has been invested in upgrades for key equipment, technologies and facilities:
More than CNY18 million ($2.37 million) has been invested in renovating old urban pipe networks and building a new pipe network:
Initiating construction of the No 4 water plant and the mountains and towns water supply project, to satisfy the urban economic development requirements:
About the service quality system
Granting the concession right
Service price and tariff adjustment formula
Regulation for water quality and service
8.3 Project appraisal and lessons learnt
Successful practice of a concept that achieves win-win situations for all parties
Gradual reform promotes cooperation between government and investors
The favourable investment model helped to advance the new enterprise’s development
Institutional reform and attracting investment together created a smooth transition for the enterprise
A sound model of asset disposal promoted sustainable development of the enterprise
Leasing the distribution network integrated the management of the treatment plant and the network
The shareholder’s strong background created ideal conditions for the development of the newly-established enterprise
A worry about the lack of competition
Contracts must specify the responsibilities and obligations of the enterprise
A continuously improving legal system acts as a guarantee for the establishment of a regulatory system
The contract should leave room for future advances in government regulations
Project sustainability is important
Chapter IX. The Macao water supply concession
Population and administrative division
Water resource condition and water pollution problems
Construction of the urban water infrastructure
Economic development and social conditions
9.1.2 Background and history of the municipal public utility privatisation
9.2 Project model and its characteristics
9.2.2 The Macao Water Supply Company’s concession right
9.2.4 Enterprise investment components
9.3 Experiences from the project
Efficiency and service level significantly improved after marketisation
The right to the concession was gained with only a small investment
The partner has a long record of success
Water tariff includes all production costs and returns
An effective communication mechanism was established between the public and private sector
The regulatory system for system performance comparison should be strengthened
The government has not been fulfilling some of its responsibilities
Chapter X. The Hefei Wangxiaoying wastewater treatment plant TOT project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
10.1.2 Main motives for reforming municipal public utilities
10.2 Project model and its characteristics
10.2.2 Project company profile
10.2.3 Project characteristics
Service price and tariff adjustment formula
10.2.4 Regulation and related policies
10.3 Project appraisal and lessons learnt
Standardised operations provided a fair and equitable platform for project implementation
The high price of the asset transfer considerably stimulated the market for state-owned assets
Sufficient participation by the relevant government departments in the early project phase promoted smooth project negotiation
The bid winner felt confident about the project risk and payment
The transfer of overvalued assets is not favourable to the long-term development of the water sector
Making traditional enterprises restructure first before reforming is the basis for marketisation reform
Chapter XI. The Harbin Pacific wastewater treatment plant BOT project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
11.1.2 Main motives for reforming municipal public utilities
11.2 Project model and its characteristics
11.2.2 Project company profile
11.2.3 Project characteristics
Service price and tariff adjustment formula
11.3 Project appraisal and lessons learnt
11.3.1 A smoothly implemented project
11.3.2 Positive impact on the investment environment
11.3.3 Effective control of cost and price
11.3.4 The company did not choose project financing
11.3.5 The long-term success of the project is dependent on the government’s credit worthiness
Chapter XII Construction and operation of the Guangzhou Xilang wastewater treatment system
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
12.1.2 Main motives for reforming municipal public utilities
12.2 Project model and its characteristics
12.2.2 Project company profile
12.2.3 Project characteristics
The Beijing Urban Sewage Group
12.3 Project appraisal and lessons learnt
12.3.1 The first operation and management project that was openly bid for
12.3.2 Achieved system-wide operation of the water supply system
12.3.3 Effective risk control
12.3.4 Policy obstacles to the sewer network equity holdings
Chapter XIII. The Chengdu No 6 water supply plant BOT project
Population and administrative division
Water resource condition and water pollution problems
Construction of the urban water infrastructure
Economic development and social conditions
Reform of the water tariff
3.1.2 Main motives for reforming the municipal public utilities
13.2 Project model and its characteristics
13.2.2 Project company profile
13.2.3 Project characteristics
Project progress and results
Granting the concession contract
Service price and tariff adjustment formula
The Chengdu Municipal Construction Commission
Regulation of water quality and service
13.3 Project appraisal and lessons learnt
A successful example of project financing that properly followed protocol
Breaking the monopoly of the wholly state-owned basic urban infrastructure industry and expanding financing channels
The introduction of both foreign funds and advanced technology was beneficial
Inaccurate forecasting of the volume of water put this project in a tight spot
Unreasonable batching of investments with high costs
The water supply plant BOT project resulted in a separation within the water supply system
The government’s decision-making and risk analysis abilities are to be improved
Chapter XIV. Changzhou Chengbei wastewater treatment plant TOT project
Population and administrative division
Water resource condition and water pollution problems
Construction of urban water infrastructure
Economic development and social conditions
Reform of the water tariff
14.1.2 Main motives for reforming the municipal public utilities
14.2 Project model and its characteristics
14.2.2 Project company profile
14.2.3 Project characteristics
Adjustment principle for the service price
The Changzhou Drainage Management Division
The Changzhou Municipal Urban Group Corporation
The Changzhou Municipal Bureau of Environmental Protection
Regulation of water quality and service
14.3 Project appraisal and lessons learnt
14.3.1 Solely transferring the right to operate was an important characteristic
14.3.2 Public investment and standardised operation
14.3.3 Those responsible for attracting investment displayed effective organisation, solidarity and excellent cooperation
14.3.4 Careful and thorough work in the early stages assured the success of the work in the later stages
14.3.5 The project guaranteed a basic balance between the rights and obligations ofthe investor
14.3.6 The project benefited the general public with a fixed price for the transfer of the right to operate and opened the unit service price for public bidding
14.3.7 The investor with the best overall service won the bid
14.3.8 Investment attraction was a great way to choose investors
14.3.9 The lack of property rights ownership influenced the financing of the project to an extent
Chapter XV. The Beijing Dongba and Fatou wastewater treatment plant BOT projects
Population and administrative division
Water resource condition and water pollution problem
Construction of the urban water infrastructure
Economic development and social conditions
Reform of the water tariff
15.1.2 Main motives for reforming the municipal public utilities
15.2 Project model and its characteristics
15.2.2 Project company profile
15.2.3 Project characteristics
Service price and tariff adjustment formula
Principle of tariff adjustment
Regulation of water quality and service
15.3 Project appraisal and lessons learnt
The Beijing municipal government’s deep understanding of marketisation was a guarantee of success for the project bidding
Both parties’ extensive experience allowed them to create a sensible implementation scheme during the negotiation phase
Standardised operating procedures and the participation of a professional consultancy ensured openness and equity in the project’s operation
A successful attempt to bundle small projects for bidding
The project diversified the operational models for Beijing’s wastewater treatment sector
There was insufficient preliminary communication among government departments
There was an unsound legal framework and contradictions in the procedures
Project company financing was constrained
Financing difficulties in small BOT projects
Chapter I. Policy analysis of urban water sector market-oriented reform in China
1.1 Government policies that promote urban water sector market-oriented reform
1.1.1 Open market policies
Opinions on promoting and guiding private investments (1 February 2002)
Catalogue of industries to guide foreign investment (4 March 2002)
Notice on accelerating project pro-phase work and promoting industrialisation of the urban water supply and wastewater treatment (Jibantouzi[2002] No 1451, 11 November 2002)
Opinions on promoting industrialisation of urban wastewater and garbage treatment (10 September 2002)
Opinions on accelerating municipal public utility marketization (Jiancheng [2002] No 272, 27 December 2002)
Notice on improving investment and promoting economic development (20 May 2003)
Decision on some issues concerning the improvement of the socialist market economy (October 2003)
Catalogue of priority industries for foreign investment in the Central-Western region (revised in 2004) (23 July 2004)
1.1.2 Investment and financing policies
Policies on clearing up fixed return
Concerns of investment system reform
Interim measures for the management of central budgetary investment subsidies and interest discount projects
1.1.3 Policies relating to enterprise organisation reform, property right transfers and property management
Summary of major policies
Related policies and regulations
Rules on the evaluation and management of state assets (No 91, 1991)
Notice of China Securities Regulatory Commission, the Ministry of Finance and the State Economic and Trade Commission on the relevant issues concerning the transfer of state-owned shares and corporate shares of listed companies to foreign investors (Zhengjianfa[2002] File No 83, 1 November 2002)
Interim provisions on introducing foreign investment to reorganise state-owned enterprises (8 Novmeber 2002, entered into force on 1 January 2003)
Interim measures for the supervision and administration of state-owned assets of the enterprises (13 May 2003)
Interim measures for the management of the transfer of the state-owned property right of enterprises (promulgated on 31 December 2003 and entering into force on 1 February 2004)
Notice on the Relevant Issues concerning the Transfer of the State-owned Property Right of Enterprises (Guozifachangquan[2004] File No 268, 25 August 2004)
Opinions on strengthening the regulation of operation of urban wastewater plants (Jiancheng [2004] File No. 153, 30 August 2004)
1.1.4 Water price policies
Current policies and regulations on water pricing
Law of the People’s Republic of China on prevention and control of water pollution (issued on 11 May 1984, put into effect on 1 November 1984, revised on 15 May 1996)
Price law of the People’s Republic of China (issued on 29 December 1997, put into effect on 1 May 1998) issued by the Standing Committee of the National People’s Congress
Measures for managing the urban water price (issued and put into effect on 23 September 1998)
Notice on relevant issues concerning implementation of measures for managing the urban water price (issued and put into effect on 2 June 1999)
Notice on strengthening the charging of wastewater treatment fees and establishing a positive operation mechanism for urban wastewater treatment and centralised treatment (issued and put into effect on 6 September 1999)
Circular on urban water supply, water saving and water pollution control (File No 36 from the State Council, issued on 7 November 2000)
Notice on further promoting urban water price reform (issued on 1 April 2002)
Water law of the People’s Republic of China (issued in 1988, revised on 29 August 2002 and put into effect on 1 October 2002)
Notice on further strengthening water-saving in urban areas and ensuring water supply safety (issued on 22 August 2003)
Measures for administering the price of the water supplied through water networks (put into effect on 1 January 2004)
Notice on promoting water price reform, promoting water-saving and protecting water resources (File No 36 from the General Office of the State Council, issued and put into effect on 9 April 2004)
Composition of the water price
Price for engineering water project supplies
1.1.5 Concession policies
Current policy presentation of the concession concept
Amplification of the term ‘concession’ in Opinions on accelerating marketisation of municipal public utility institutions
Provisions on concessions in Measures for the administration of municipal public utility concessions
How to understand current concession policies
Scope of application of concessions
1.1.6 Regulation policies
Regulation policy framework
Policies on water quality standards and water quality monitoring for the water supply
Regulation policies for wastewater treatment and treatment system
1.1.7 Policies on the use of recycled water
Policies for promoting the use of recycled water
Standardisation policies for the use of recycled water
Market guidance policies that centre on the water price
1.2 Making and implementation of major local reform policies
1.2.1 Promotion of Opinions on accelerating the marketisation of municipal public utility institutions by local governments
Concession and regulations
Compensation and price mechanism
Investment and financing mechanism
Enterprise reform and property rights transfer
Disposal plan for state-owned assets
Preferential reform policies
Preferential tax policies
Favourable policies for land use
Other preferential policies
1.2.2 Local government promotion of Measures for the administration of municipal public utility concessions
1.2.3 Local government’s promotion of the reform policies for water prices and wastewater treatment fees
Chapter II. The major reform models in China’s urban water sector
2.1 Market-oriented reform models in the urban water sector
2.1.1 Defining the government’s responsibility in the urban water sector is a prerequisite to establishing a model for regulation
2.1.2 Reform experiences of other countries
2.1.3 Differentiation of market-oriented reform models
Competitive concession (concession)
2.2 Chinese water sector reform model choice
2.2.1 Several models co-exist in the Chinese water sector
2.2.2 Competitive concession is the current leading mode
2.2.3 The Chinese water sector’s marketisation system needs a combination of the above two major models
A favourable link will follow the principles below
System support for the combo model
Chapter III. An analysis of the market-oriented reform of China’s urban water sector
3.1 The transformation of the government’s ro
3.1.1 The role of transformation in the relevant management departments
The function of the government under the planned economy system
Transformation of the government’s function in the water sector
3.1.2 The responsibilities of major government departments
Water resources departments
Other major administrative departments
3.1.3 The reorganisation of state-owned enterprises
3.2 The rise of social enterprises
3.2.1 Investment project analysis of the major enterprises in the industry
3.2.2 The investors’ main strategies
Well-prepared state-owned enterprises
Capital investment enterprises
Foreign-funded enterprises: from the active entry of international capital to the strategic adjustment of multinationals
The environmental engineering enterprises that were grafted onto the capital market
Chapter IV. Analysis of key problems in China’s urban water sector marketisation reform
4.1 Clarification of the problem with understanding urban water sector marketisation
4.1.1The problem with understanding the aims of marketisation
4.1.2 The problem with the vague positioning and characterisation of the water industry
4.1.3 Marketisation does not mean the government no longer invests in the water sector
4.1.4 Water sector marketisation is not the same as privatisation and internationalisation
4.1.5 Ambiguous understanding of the regulatory function of the government
4.2 Issues relating to the modes and operations of marketisation projects
4.2.1 Entrance competition and process competition
4.2.2 The problem with the relationship between asset transfer and operational rights transfer
4.2.3 The problem with determining the value of a concession
4.2.4 Overvaluation of water sector assets is harmful to marketisation reform
4.2.5 Problems with water asset disposal methods and reasonable returns
4.2.6 Partial optimisation is no substitute for holistic optimisation
4.2.7 Applicability of bundling small BOT projects
4.2.8 Restrictions on shareholding rights will not hinder the acquirement of pipeline and distribution network operating rights
4.2.9 Project differences due to varying departure points and focuses
4.3 Issues relating to the water sector reform policies and laws and improving the management system
4.3.1 Problems with pre-project research, systematic planning and sound decision making
Market-oriented reform lacks systematic planning
Detachment from other elements of urban planning restricts water sector development
4.3.2 Defects in present policies, laws and regulations
Limitations of concession policies
Ambiguous stipulations for the composition of pipeline investment
Lack of policy guidance in the assessment of the management of state-owned assets in the water sector
Unfulfilled incentive systems and ambiguous preferential policies
The information dissemination system and complaint and response mechanisms are imperfect
Implementation and operability of policies and regulations
4.3.3 Problems related to urban water sector management system reform
Establishment of a regulatory system
Regulatory departments overstep their jurisdictions in management and their consciousness of power is too strong
The absence, mismatch and weakness of management of industry regulatory departments
Flaws and confusion in the existing regulation system
Lack of ability and measures to regulate
Lack of supervision of the government: supervision by the public and vertical supervision between different levels of the government
There is a lag in the establishment of regulatory systems at the local level
Management issues during the project construction phase
Treating water sector marketisation projects the same way as any other ordinary construction project in the bid process
The rights and interests of bid winners are not fully realised
Collaboration problems in public bidding and construction management
Issues relating to land-use rights hinder the implementation of BOT projects
Lack of standardisation and guidance for financing models such as BOTs and TOTs
4.4 Issues in the investment and financing systems in urban water sector marketisation reform
4.4.1 Problems in government financing
A vague understanding of the use of government funds
The price of introducing investment through stimulating reserve assets
Unclear channels between government policy-based funds and marketisation projects
Inefficiency of government investment
4.4.2 Uneven enterprise investment and financing channels
The restrictions of financial instruments
Project financing is difficult to achieve
The difficulties that traditional urban water sector enterprises face
4.4.3 Sources of capital for water infrastructure construction are not connected to the long-term capital markets
4.5 Pricing and fee collection policy issues of water sector reform
4.5.1 Issues and discussions on water resource fees
Mixed in with the price of engineering water
The water resource fee should properly take the form of a water resource tax.
4.5.2 Pricing of the engineering water supply and its regulation
The pricing mechanism for the engineering water supply is gaining more and more attention from society
The pricing of the engineering water supply requires market restraint and public participation
Reform in the water resource industry is the premise behind rationalising the engineering water price
4.5.3 Cost components and regulation of the urban water price
4.5.4 Wastewater treatment fee and aquatic environment price
The aquatic environment price is an institutional fee charged by the government
Survey and analysis of the major problems in wastewater treatment fee collection
Some cities have not yet begun to charge a wastewater treatment fee, and the charging level is low
The wastewater treatment fee for self-provided water sources is hard to collect
The wastewater treatment fee and the wastewater discharge fee
4.5.5 Pricing mechanism and full cost recovery accounting
The premise of a scientifically-based water pricing mechanism is the complete separation of the engineering water price
The pricing foundation of the engineering water price is full cost recovery accounting
Full cost recovery accounting does not only apply to engineering water pricing
4.6 The development problems of other related organisations in urban water sector market-oriented reform
4.6.1 Financial organisations
4.6.2 Professional service agencies
Professional agencies may help local governments to create water sector reform plans
Bring the functions of professional consulting firms, Attorney legal services and bidding agencies into play
4.7 Main issues in the use of recycled water
4.7.1 A lack of policies that encourage wastewater recycling
4.7.2 The urban water price system is not fully functional
4.7.3 Lack of associated infrastructure
Reform of China's Urban Water Sector
( Water21 Market Briefing Series )
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