Changchun Wastewater Project

cancelled

In January of 2000, China Water Company (CWC) was awarded a 21-year BOT contract for the Changchun Beijiao Wastewater Treatment Plant and associated facilities. The objective of the project was increasing the wastewater treatment capacity of Changchun municipality and reducing the water pollution problem in the lower reaches of the Songhua River, the major source of potable water for a number of cities in North East China. The production of approximately 390,000 tons of sewage/day began in January 2001. To implement the contract, China Water Changchun Company was created as the project company, a joint venture formed by China Water Company (CWC) and the state-owned Changchun Urban Drainage Company (exact shares were undisclosed). As of 2002, CWC itself was owned by Thames Water (a subsidiary of RWE) (48.8%) and Sime Darby Bhd. of Malaysia (33.3%). The JV was responsible for building and operating of the Changchun Beijiao Wastewater Treatment Plant which included 1) a coarse screen and pump station with a processing capacity of 10.44 cubic meters per second, 2) fine screen and grit chamber with a processing capacity of 5.42 cubic meters per second, 3) primary wastewater treatment system and corresponding sludge treatment system with a processing capacity of 5.42 cubic meters per second and 4) effluent discharge system. Total investment for the project was estimated at US$32 million. According to a 2004 report, the Changchun Urban Drainage Company had delayed the wastewater fee to CWC from the beginning of 2002 and had completely refused any further payment to CWC from March 2003. The accumulated unpaid wastewater fee had reportedly reached more than 90 million RMB by 30 September 2003. The Changchun Urban Drainage Company claimed it could not collect enough wastewater fees to satisfy the requirement stated in the contract. The state-owned company also claimed that since the project was set up with a guranteed "rate of return" to the private investor, such a contract was illegal under Chinese federal law and could therefore be canceled. The contract was terminated in February 2004. None None