There is still plenty of room for further water price hikes in China, despite a series of price rises by local governments since late last year, experts said.
They also said the government should gradually reduce interference in price setting and allow enterprises a bigger say in the sector.

The present mechanism is irrational and should be overhauled, said Wang Guangqian, director of the Institute of River and Coastal Engineering at Tsinghua University.

Price levels are not high enough to meet actual costs and enterprises involved in the business still find it hard to support themselves.

"People still generally regard water as government welfare work, but many water users should pay more,'' said Zhu Tan, a water expert and also a deputy to the Ninth National People's Congress (NPC).

Water prices should vary from region to region, customer to customer and from business to business, other deputies said.

Further reform of the water pricing system was a common call from deputies both from thirsty northern provinces and from water-rich southern regions who attended the Fourth Session of the Ninth NPC, which ended last week.
Higher water prices will trigger public awareness of the scarcity of water and promote water saving, they said.

China is one of the countries in the world facing big water problems.
To get through the crisis, many domestic cities raised the price of water for different users at the end of last year.

The Ministry of Water Resources also promised to continue to raise prices gradually over the next five years to encourage water-saving efforts and to ease supplies.

But not all is well, despite the price hike. Experts said efficient management should be promoted and water supply should be treated as a business. The government needs to break the monopoly and introduce more market competition in the sector, they added.

"Water should be more commercialized,'' said James Gao, chief representative in Beijing of the Paris-based Suez Group, the former Suez Lyonnaise des Eaux and one of the world's biggest water service providers.
Water prices in China often ignore business implications.

Price levels should reflect the full cost of supply, including distribution, management and waste treatment, said Gao.

Waste treatment fees, for example, should be raised and added in the price of water.

Moreover, the government should change from being a water provider to a regulator, he said.

Gao urged the breaking up of the State water monopoly, which covers areas such as waste treatment and distribution.

Involvement of private firms will greatly help ease the financial burden for the government and increase efficiency, experts said.

Most importantly, the measures will help shape a new water price mechanism which will see a drop in water prices in the long run and better services as more competition, higher efficiency and better management will ultimately reduce costs, Gao said.

(China Daily 03/21/01)