Privatization of Water Utilities in China the Shenzhen case

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Privatization of Water Utilities in China the
Shenzhen case

• Globalization Monitor
• Hong Kong

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Globalization Monitor

• Based in Hong Kong, founded shortly after the
  Seattle protest against the WTO in 1999.
• Its editorial board members are activists from
  trade unions, the green movement, regional groups
  and grassroot organizations.
• What we do
• Promoting public awareness of the adverse effect
  of globalization, neo-liberalism and corporate
  monopolies
• Lobby for legislation that restrain the behaviour
  of Corporations and protect the rights of
  workers, women, consumers, marginal groups and
  also the environment
• Promote an autonomous social movement in the
  fight for political and economic democracy and
  the just distribution of social resources.

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Water in China

• Water resource rich
• Acute water shortage problem 2/3 of cities
  suffered from water shortage
• Rising water demand due to population and
  industrial growth and urbanization
• Pollution
• Loss in water bodies

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Privatization of water utilities some push
factors

• States economic reform and open policy since
  1978
• Accession to WTO
• Water laws and other related policies aimed at
  marketization
• 1988 Water Law water consumption should be paid
• 1998, regulation states water tariff should
  include profit.
• 2000-2005 A number of polices issued to speed up
  marketization 2002 clear policy to open up
  public utilities to foreign investment
• Insufficient funding for operation and
  infrastructure resulting in broken water pipes,
  water leakage etc
• Ill-management by the bureaucrats
• Municipal government wants to draw in capital and
  technology
• Increased demand for water wastewater treatment
  and urban infrastructure

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Water market the States plan

• Wastewater treatment 1000 new water treatment
  plants by 2010 and upgrading infrastructure of
  existing plants.
• Improving drinking water quality
• Chau Bauxin, the vice-chairman of Construction
  Department in 2006 stated that the capital
  investment for the next 5-10 years is estimated
  to be RMB1000 (USD147) billion, including RMB270
  billion in water conservation and safety in
  drinking water, RMB330 billion in water treatment
  and recycling of water, RMB250 billion in
  long-distance drawing water projects, RMB 250
  billion in reviving ecological water bodies.

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The structure of Shenzhen Water Group
Capital Water 50
Veolita 50
100
Shenzhen SCCRMS 55
Capital Water Gp. Veolita 40
General Water Gp 5
Shenzhen Water Group
SCCRMS The State Council Committee for the
Regulatory and Management of State owned property
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The mode of franchise
Shenzhen Water Utility Board
Franchise
Water supplies
Investment, operation, management,
maintenance, Waterworks, water pipes, drainage,
sewage treatment.
SCCRMS The State Council Committee for the
Regulatory and Management of State owned property
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Shenzhen Water Group - history

• 1990 Shenzhen SCCRMS generally formed
• SCCRMS, The State Council Committee for the
  Regulatory and Management of State owned property
  
• 1993 Shenzhen Water Board formed, its role
  switched from ownership and management to
  regulatory bodies
• 2001 Water Supplies and Sewerage Management
  office joint to form the Shenzhen Water Group
  (the first one in China to combine water supplies
  and sewerage treatment), at the same time
  bringing sewerage cost into water tariff.
• 2003 45 shares sold to the joint venture co.
  by Veolita Capital Water Group at USD49
  million. Its the largest share-trading case in
  water market of China.
• 2004 Shenzhen Water Group formally turned from
  state-owned enterprise to joint-venture
  enterprise
• 2005 Joint with Tianjian Group to form the
  Shenzhen Investment Co. to expand its investment
  to other cities of China
• Until 2008, bought shares of most of the district
  water groups with Shenzhen, further unify the
  water management and water tariff.

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Shenzhen Water Group assets and capital

• Have invested 17 water projects in 7 provinces
• Owned 49 water plants in China (No. 1 in China)
• water supplies volume 7.28 million tons/day
• wastewater treatment 1.61 million tons/day
• Population served in China 18 million
• Service coverage in Shenzhen 97 (water
  supplies)
• 99 (sewerage treatment)

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Issue faced

• Rising water tariff academics government
  officials claim that theres a need to rise 200
  more to attain a level of 5 of income. Poor
  people suffer.
• Collusion of government officials and business
  enterprise
• Urbanization dams, long-distance water pipes
  driving water from rural to urban areas
• Industrial pollution add on for demand in
  wastewater treatment
• Vulnerability of local municipal government to
  big capitals from large domestic and foreign
  enterprises
• Dominant discourse for marketization and
  privatization
• Lack of democracy people not able to voice and
  be organized