Water Price Hike Requested

Presently there is a voice asking for the price hike in water supply. Is that necessary? What will happen if this comes true?

In November, the Fourth China (International) Water Affair Summit was held in Beijing, China. The state-owned Beijing Capital Co., Ltd, China Water Industry Investment Co., Ltd and the foreign-funded Sino French Water commonly asked for the increase of the water price.

According to Wang Hao, a water resource expert from the Chinese Academy of Engineering, the cost of water supply now takes 0.8% of the income of a Chinese family. Only when the proportion reaches 2%, the ordinary residence may attach importance to this matter.

From 2009, the water prices in Tianjin, Shanghai, Nanjing and Guangzhou were subsequently adjusted. Tianjin has taken the place of Beijing in the champion of water price in China. Presently, relevant hearings are being held in Beijing, Harbin and Yinchuan to decide whether to increase the water price or not. Wang Hao said that the policies of water price changes may be issued in 2010.

Water Too Cheap?

During his lectures, Wang Hao said that the expenditure of the water will influence the residents’ attitude in using water. When the cost of water only takes 1% of the family’s income, people don’t pay attention to saving water; if the proportion reaches 2%, people will begin to care about how much water they have used; if the proportion reaches 2.5%, people will attach importance to this matter and think of saving water; if the proportion is 5%, people will emphasize on saving water; if the proportion is 10%, people will say: “I must try my best to use a basin of water for several times.”

“Now, such a proportion in China is usually lower than 0.8%, which can not raise people’s concerns about saving water,” said Wang Hao. If the water price is settled at 2% of the family income, one ton of water will cost 11.57 yuan (USD 1.69) in Beijing, 9.09 yuan (USD 1.33) in Tianjin, 13.12 yuan (USD 1.92) in Shanghai, 11.28 yuan (USD 1.65) in Nanjing, 12.48 yuan (USD 1.83) in Guangzhou and 6.32 yuan (USD 0.93) in Urumqi, which are multiply higher than current ones in these cities.

Complaint from Water Suppliers

During the Fourth China (International) Water Affair Summit, the organizer held a press release for the media to communicate with the water suppliers in China. The questions about the profit space for the water suppliers once struck the nerve of the water suppliers.

Sun Huaming, vice president of Sino French Water said: “The state-owned companies can enjoy 8% to 10% investment return and the foreign-funded water suppliers can have 12% as stipulated by the government. But in truth, due to the restriction of the water price, most of us have not seen profits in these years.” His words were supported by the representatives from Beijing Capital Co., Ltd and Veolia Water China.

“If you have no hand you can not make a fist,” said Huang Xiaojun, vice president of Veolia Water China.

“We are under great stress,” said Pan Wentang, general manager of Beijing Capital Co., Ltd. With the pricking up of the pollution, the water suppliers have to put more capital into producing water which meets the standards of drinking water stipulated by the government.

Price Hike for Restructurings

“Now we are haunted by the leak of the water pipelines. In one city our company was stricken down by the 40% leak rate, which means that about 40% of the water we provide for citizens is gone in the pipelines. I admire Japan in which the leak rate is only 3%. But we can not afford buying such expensive equipments,” said Pan Wentang. If the enterprises want to rebuild the devices and pipelines, they will need a lot of capital which they can not afford.

Fu Tao, head of Water Research Center, Tsinghua University, said that the old and rusted pipelines may affect the water quality during the transport process. He also said that it is necessary to increase the current water price by one or two yuan each ton for rebuilding the pipelines.

According to the data, there are about 4,000 water plants in China, half of which never get engaged in the test of water quality and 20% to 30% only test the six normal standards. There are fewer than ten water enterprises in China having the ability to produce water in accordance with the 106 standards. If neither the government nor residents contribute the money, the improvement of water quality is hard to be realized.

Treble Goals of Water Price

According to Pan Wentang, now the water price in China contains three objects: the first one is to guarantee the service and quality of water; the second one is to guarantee the efficient and rational utility of water; the third one is to provide convenience for the government to collect other fees, such as the rubbish disposal charges. Actually, the third object has no relations with the water suppliers. But they will work for it because it is stipulated by the government.

Pan Wentang said that only the undertaking of the water quality and service is thought to be the value of their product. However, the fees of improving water utility and so on are taken by the government. The water suppliers only play the roles of withholding these fees for the government.

In Pan’s opinion, the price which can guarantee the water quality should be set based on the reasonable analysis of cost. Then different water suppliers compete with each other according to market rules to form the most suitable prices. If the water supply for a certain area is monopolized by a water supplier, it is not good for the development of water affairs.