Research On Government Regulation On The Privatization Of Urban Water Supply

Along with China's transition to market economy and its increased urbanization,reforms related to the privatization of water supply in cities are in full swing. As thewater supply is a public service by nature, the privatization movement requirescorresponding adjustments of government regulation.This thesis starts with an analysis of research and practices concerning theprivatization of urban water supply both in and outside China. It arrives at theconclusion that privatization should not merely be a change from public monopoly toprivate monopoly. An effective regulation system still needs to be installed to guaranteehealthy competition between water enterprises. Based on the case study of HangzhouChi Shan Bu Water Plant, the newly chartered water supply enterprise and the city'sregulation on water supply, this thesis probes into the current state of regulation on theprivatization of urban water supply and locates problems and their deep-rooted causes:on the regulation side, there is the lack of a sound mechanism that endorses competition;old regulation practices have not been adjusted correspondingly; on the supply side,private operators are not fully prepared to withstand business risks.With problems located, this thesis tries to construct an effective mode of regulationon the privatization of urban water supply that endorses competition. While the focus ofregulation is to create an open, just and fair business environment for water enterprise,this new mode of regulation can be attainable only after water enterprises go throughownership restructuring to free themselves from the intervention of govemment in theiroperation and are given special licenses to operate and compete on account of the priceand quality of their service. This thesis explains the theoretical basis for this new modeof regulation and comes down to some basic concepts as well as critical issues: thesplitting of corporate management and govemment control, independent operation, thedisconnection of water production and supply, the competitive contracting, oligarchcompetition, public participation, change of organizational function, independentregulation. It concludes by proposing eight major measures to enforce this new mode ofregulation: improving procedures, mechanism and methods of regulation, optimizinglicensing system, installing third-party regulation agencies, legal interpretation andprotection, crisis management mechanism and public participation.