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8/3/2019 Understanding Urban Water Tariff in the PRC by Jingmin Huang
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Understandin Water Tariff Understandin Water Tariff
in the PRCin the PRC
J ingmin HuangUrban Development Specialist
East Asia Urban & Social Sectors Division
Email: [email protected] February 201019 February 2010
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Scope of Today’s PresentationScope of Today’s Presentation
• Overview of Urban Water Supply andWastewater Management
• PRC’s Water Tariff: Current and Proposedus men s
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Overview:Overview:r an ater upp y an astewater anagementr an ater upp y an astewater anagement
Water Supply Coverage
(2007)
Wastewater Management
• 34%treatment ratio in 2000
• 94% urban population
served (350 million) • 63% treatment ratio in 2007
• treatment capacity of 71m m3• o a coun y
population served (102 million)per day for 883 municipal
WWTP in 2007
Largest water supply and second largest wastewater
treatment in the world
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Urban Water Su l StatusUrban Water Su l Status
350
400 domestic waterconsumption (100m m3)
population not covered(m)
150
200
250 population covered(m)
0
50
100
Year
2000
Year
2007
Year
2007
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Urban Wastewater Treatment StatusUrban Wastewater Treatment Status
350
400un-treated Urban
wastewater(100m m3)
200
250
300 treated urban
wastewater(100m m3)
50
100
150
0
Year
2002
Year
2007
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• Average water tariff is 1.7 CNY/ m3 and 0.7 CNY / m3 for
wastewater treatment for domestic usage
• Water expense is 1% of total family income vs. 2-5 % globalaverage
• Gross profits decreased from -100m CNY to - 321m CNY
(2002-2007)
• Net profit further decreased from -190m CNY to - 596m CNY
• Proposed tariff increase in 2008 postponed due to highroposed tariff increase in 2008 postponed due to high
consumer price index (CPI)
ere s an urgen nee o a us wa er ar s n .
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Why Increase Water Tariffs
• Current level is low (not at full cost recovery level.)
• Water conservation in urban areas needs to be
promoted
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• People attribute water tariff increases to the high bidding
rices throu h which forei n com anies ained ownershi
Foreign companies operate about 10% of all urban watersu l ca acit , 44m o ulation with focus on ma or citiesin PRC
• Peo le are not re ared to ay more because of erceivedinefficiencies, i.e. :
• Low operational efficiency
• High operational cost
• High Non Revenue Water (NRW)
• High salary of staff
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us ca ons or ar ncreaseus ca ons or ar ncrease
Ex erts’ View ’
• PRC's water tariff level islower than world average
• Encourage waterconservation and water useower than world average
•
Water tariff has beenincreasing since 1990's, evenb f t f f i
efficiency
• Charge proper tariff (at leastrecover full O&M cost asefore entry of foreign
companies
• Low water tariff undermines
recover full O&M cost asminimum)
• Improve services to urbanow water tariff underminessustainability and contributesto worsening water shortageespecially in urban areas
Improve services to urban
areas
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Is it OK to Increase Tariffs?Is it OK to Increase Tariffs?• $2.5 billion in ADB water investments including
wastewater treatment - need to recover cost, at least forO&M
• ADB su orts water tariff increases to achieve full costrecovery and sustainability
• PPP is not a golden key to tariff increase
According to a WB study, there is no indication of tariffsmoving closer to full cost-recovery levels under the
private sector water industry operation
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THANK YOU!THANK YOU!
