Large projects needed to tackle China's shortages
China will give foreign companies more access to invest in large water projects, the country's top economic planner said on Thursday, as the central government looks for ways to finance a massive infrastructure program aimed at tackling chronic shortages.
The country is trying to make better use of its scarce and polluted water. To do so it needs to recruit private capital to finance several multibillion-yuan spending plans to clean up lakes and rivers and improve pipeline infrastructure.
The National Development and Reform Commission (NDRC) said on its website on Thursday that it will allow qualified investors, including foreign and international joint ventures, to bid for and construct water projects.
Foreign water firms are looking to gain a foothold in China where they see tremendous business opportunities.
"The advantage that we have now is that there's quite a strong and hard push for the government to do something about cleaning up the water," said Ealden Tucker, general manager of global water, at Australia's environmental engineering firm Clean TeQ, as quoted in a Reuters article dated January 13.
China's water market could be worth "anywhere between $50 million to $300 million" for Clean TeQ, according to Tucker, whose firm is looking to enter China six years after its last attempt.
"We do see in the next few years more opportunities coming again for our company that we've not seen for the last two to three years," said Steve Clark, chief executive China at France-based utility giant Suez Environnement, one of the Chinese water market's largest foreign companies, as cited in the same Reuters article.
Meanwhile, the NDRC said the nation would favor Chinese private investors as partners when it came to running joint projects with local governments. The construction of urban water supply and drainage networks will also be limited to majority-owned Chinese enterprises, it said.
To help finance water projects, debt-ridden local authorities are being encouraged to use a government-backed business model known as Public-Private-Partnership, which will allow stakes in State assets to be transferred to private firms.
China also plans to make local water prices more market-oriented in a bid to improve profitability in the sector. Prices have long been low, encouraging waste and deterring investment.
"Price reform will increase competitiveness in the market, and competent bidders could win more contracts if the market mechanism is set properly," said He Yuanping, executive vice president of Originwater, a private clean water technology company.
The NDRC statement also said China would continue with its plans to establish a trading platform for water usage permits, which it hopes will improve the way scarce water resources are allocated among industrial, urban and agricultural users.
