BEIJING (AFX-ASIA) – China’s Ministry of Construction has issued regulations allowing private investment in the urban utility sector from May 1, breaking the current government monopoly, Xinhua news agency reported, citing a ministry.
The news agency quoted Li Dongxu as saying private investors can operate water, gas, heating, public transportation, and water and waste management operations after they win public bids and obtain government franchises.
However, under the new regulations, private investors can only manage the projects for a maximum of 30 years. If the government believes that private investors threaten public safety and security in any way, their companies will revert to state control after due process.
Mr Li said: “We started the pilot project in 2003 in cities such as Beijing and Shenzhen, and discovered some local governments have given investors over-long franchise terms or promised fixed rates of return.”
While giving the government more supervisory power, the regulations also protect investors from government abuse of power, he added.
Under the regulations, when governments breach contracts, they must pay for investor losses.
“Our purpose is to establish a good surveillance system and good rules in urban utilities markets,” he said.