Urban Water Supply: Case Study of Public-Private Partnerships (PPPs) in Maanshan

Publication | November 2010

Being located on the south bank of the Yangtze River and having high rainfall, Maanshan City enjoys abundant water resources. An estimated 88.7% of the urban population has access to water supply.

This case study narrates how public-private partnerships (PPPs) in the water sector has improved water service quality and quantity at a lower up-front cost for the government. Maanshan Construction Commission (MASCC) started a joint venture with Beijing Capital Group (BCG) for one water supply plant that sold purified water to Maanshan Water Supply Company (MASWSC). This plant outperformed other plants operated by MASWSC alone, and in 2004, this model was expanded to cover all the water supply plants in Maanshan City. The BCG took a 60% stake in the joint venture for CNY90 million while MASWSC held the remaining 40% stake.

With the establishment of the joint venture, Maanshan Beijing Capital Water (MASBCW), the government no longer needs to subsidize the city’s water supply plants. However, it can take over the facilities without indemnity if the concessionaire fails. The concessionaire must assume the relevant social duties as required by the government. The government also retained control over the water tariff.

MASBCW supplies potable water to a population of 560,000 with a realized production of 215,000 m3/day (water supply capacity is 335,000 m3/day). The total pipe network and the volume of water provision have increased. It has invested about CNY90 million into new infrastructure and capacity including another water treatment plant (with a designed capacity of 100,000 m3/day), renewing old infrastructure and developing a customer service system.

MASBCW has also turned over CNY18.7 million to the government in corporate income tax and other taxes, pipe network rent fee, and others. While the water tariff has been raised marginally by the government from CNY0.83 to CNY1.08 per cubic meter for household users, the firm has helped finance the development of the water supply sector and improved the water service quality and quantity at a lower up-front cost for the government.