Laws of the People's Republic of China

The State Development and Reform Commission, the Ministry of Water Resources

Decree of the State Development and Reform Commission of the PRC and the Ministry of Water Resources of the PRC

No.4

According to the relevant provisions of the Water Law of the PRC and the Price Law of the PRC, the Measures for Price Administration of Water Supply of Water Engineering are formulated, which is hereby promulgated and shall come into force on January 1, 2004.

According to the provisions of the Reply to Nullifying the Measures for Verification, Billing and Collection and Management of Water Fees of Water Engineering (GuoHan [2003] No.57) of the State Council, the original Measures for Verification, Billing and Collection and Management of Water Fees of Water Engineering (GuoFa [1985] No. 94) formulated by the State Council shall be repealed simultaneously as of the date of implementation of the Measures for Price Administration of Water Supply of Water Engineering.

Director of the State Development and Reform Commission: Ma Kai

Minister of the Ministry of Water Resources: Wang Shucheng

July 3, 2003

Measures for Price Administration of Water Supply of Water Engineering

Chapter I General Provisions

Article 1

In order to perfect the mechanism of price formation of water supply of water engineering, to regulate the price management of water supply of water engineering, to safeguard and rationally utilize water resources, to promote economical use of water, and to guarantee the healthy development of water conservancy causes, the Measures is formulated according to the Price Law of the PRC and the Water Law of the PRC.

Article 2

The Measures shall be applicable to the price management of water supply of water engineering in the territory of the PRC.

Article 3

The price of water supply of water engineering herein refers to the price of natural water sold to users by water suppliers through blocking, reservation, conduct and taking facilities of water engineering.

Article 4

The price of water supply of water engineering is composed of costs, expenses, profits and tax of the water production.

The costs of the water production refer to the direct salary, direct material expenses and other direct expenditures, as well as depreciation expenses of fixed assets, repair fees and water resources fees production expenses occurred during regular production of water supply. The expenses of the water production refer to rational marketing expenses, management fees and financial expenses in order to organize and manage the production and operation of water supply.

The profits refer to the rational revenues acquired through undertaking regular production and operation of water supply, and shall be checked and ratified according to the profit margin of net assets.

Article 5

The price of water supply of water engineering shall adopt the uniform policies and management by level and adopt the government-guiding price or the government pricing in consideration of different circumstances. The price of water supply of water engineering run by the local people encouraged by the government shall adopt the government-guiding price; other price of water supply of water engineering shall adopt the government pricing.

Chapter II Principles and Measures for Verification of Water Price

Article 6

The price of water supply of water engineering shall be formulated according to the principles of compensatory cost, rational revenues, high quality and favorable price and fair burden, and shall be adjusted according to the changes of the costs, expenses and market supply and demand of water supply.

Article 7

For the water engineering in the same areas of water supply of similar engineering status, geographical environment and water resources, the price of water supply shall be uniformly verified according to the region. The specific scope of water supply region shall be determined by the competent price departments through consultation with the competent provincial water departments. Other price of water supply of water engineering shall be verified based on single engineering.

Article 8

The assets, costs and expenses of water engineering shall be rationally distributed among various usages of water supply, energy production and flood control. The costs and expenses distributed by the water supply of water engineering shall be compensated by the price of water supply. The specific methods of distribution and accounting shall be executed according to the relevant provisions of the competent financial, price and water departments under the State Council.

Article 9

For the water supply engineering of water conservancy established by loans and bonds, the price of water supply shall enable the water supplier to compensate for the cost and expenses and repay the principal and interest of loans and bonds and obtain rational profits. The operation term refers to the cycle of economical life and shall be determined according to the weighted average of the depreciation years by category specified by the competent state financial departments.

Article 10

According to the state economic policies and the bearing capability of water users, the water supply of water engineering shall adopt pricing by category. The price of water supply of water engineering shall be divided into agricultural water price and nonagricultural water price according to the objects of water supply. The agricultural water refers to water for grain crops and economic crops and aquatic cultivation water directly provided by the water engineering; the nonagricultural water refers to the industrial water, water for water plants, water for waterpower and water for other uses directly provided by the water engineering.

The agricultural water shall be verified according to the principle of production costs and expenses of compensation water supply, free of profit and tax. The nonagricultural water, based on the production costs and expense of compensation water supply and tax calculation by force of law, shall be calculated and collected according to the net assets of water supply, with the interest determined according to long term loan interests of domestic commercial banks plus 2-3%.

Article 11

In case of the water engineering used for water of power generation and used for the water aiming at other benefits upon power generation, the water price (Yuan£¯m3) of power shall be verified according to 0.8% of the sale price (Yuan/ KWH) of the electric network at the locality of the hydraulic power plant, and other water price after power generation shall be verified against the standard no more than the standard specified by Article 10 of the Measures. The water price(Yuan£¯m3) of the water engineering only used for water of power generation shall be verified according to 1.6%¡«2.4% of the sale price (Yuan/ KWH)of the electric network at the locality of the hydraulic power plant.

The first level water price of stage power plant using the same water supply of water engineering to generate electricity shall be verified against the above-mentioned principles, and the water price of the second level and low levels shall decrease by level.

Article 12

Under a special circumstance, the price of water supplied by utilizing the dead reservoir capacity of water engineering may be verified against 2 to 3 times of the regular price of water supply.

Chapter III System of Water Price

Article 13

The water supply of water engineering shall progressively promote the water price of two-department system by combining the basic water price with the water price based on measurements. The scope and process of the specific implementation shall be determined by the competent price departments of the provinces, autonomous regions and municipalities directly under the Central Government.

The basic water price shall be verified in the principle of compensation for the direct salary, management fees and 50% of depreciation expenses and repair expenses for water supply.

The water price based on measurements shall be verified in the principle of compensation for other costs and expenses, including water resource fees and material fees, other than the basic water price, plus the calculation of the profit and tax.

Article 14

Water for various uses shall execute quota management, and the water beyond quota shall execute progressive price markup. The markup method beyond quota shall be determined by the competent price departments jointly with the competent water departments of management authority.

Article 15

In case the water source of water supply of water engineering is extremely influenced by seasons, the price of water supply may execute the water price of plentiful and dried seasons or floating price for seasons.

Chapter IV Management Authority

Article 16

The price of water supply of water engineering directly under the Central Government and cross provinces, autonomous regions and municipalities directly under the Central Government shall be examined and approved by the competent price departments jointly with the competent water departments under the State Council.

Article 17

The management authority for the local price of water supply of water engineering and the procedure of the declaration and examination and approval shall be provided for by the competent price departments jointly with the competent commodity water departments of the people's government of provinces, autonomous regions and municipalities directly under the Central Government.

Article 18

The price of water supply of water engineering listed in the content of price hearing shall execute the price hearing in full consideration of the opinions of parties concerned when formulating or adjusting the price.

Chapter V Right and Duties and legal Obligation

Article 19

In case of applying for formulation and adjustment of the price of water supply, water suppliers shall provide the competent price departments with the operation and cost circumstance of the production of water supply and present the relevant account books, documents and other relevant materials.

Article 20

The water supply of water engineering shall adopt billing based on measurements. In case of having not adopted billing based on measurements, the condition shall be aggressively created, and the billing based on measurement shall be adopted. In case of no measurement facility and instrument available, the proper pricing unit shall be determined by the competent price departments jointly with the competent water departments of management authority.

For the water engineering adopting the water price of two-department system, the basic water fees shall be collected according to the water demand quantity or the water supply capacity of the engineering, and the measurement of water fees shall be collected according to the actual water supply quantity of the measurement point.

Article 21

The water supply of water engineering shall adopt the system of price announcement. Water suppliers and water users must strictly enforce the state water price policies, and shall not modify the water price without authority.

The water fees shall be calculated and collected by the water supplier or the entity and individual authorized by the water supplier, and other entity and individual is not entitled to collect the water fees.

Article 22

Water suppliers and water users shall enter into the contract for water supply according to the relevant state laws and regulations and the water price policies. Except for natural factors beyond control, the water suppliers shall bear the compensatory obligation of the damage to water users due to failure to supply water according to the contract.

Article 23

The water user shall timely pay water fees according to the relevant state provisions. In case of failing to pay the water fees overdue, the water users shall pay liquidated damages as specified. In case the water users fail to pay the water fees and liquidated damages upon the interpellation of a rational term, the water suppliers may suspend to supply water according to the procedure specified by the state.

Article 24

Any entity or individual shall not add any charges other than the regular water fees or offer any reduction or exemption in violation of the provisions thereof. Any entity or individual is prohibited from detaining, transferring or embezzling the water fees.

Article 25

The competent price departments of the people's government at various levels shall supervise and examine the execution of the price of water supply of water engineering, and investigate and prosecute the entity or individual in violation of the regulations and policies of the price according to the Price Law and the Provisions on the Administrative Punishment of Price Misbehaviors.

Chapter VI Supplementary Provisions

Article 26

The water fees of water engineering are the operation revenues the water suppliers obtain in undertaking the production of the water supply, and its uses and management shall be executed according to the relevant financial and accounting system of the financial competent departments and the competent water departments under the State Council.

Article 27

Except for the drainage and discharge of the flood of farmland to the benefit the farmers, for the drainage and discharge of the flood of water conservancy with clear scope of benefit, the management unit may charge the fees of water discharge to the beneficiary entity and individual, and the standard shall be verified by the price competent departments of management authority according to the principle of slightly lower price than the price of water supply.

In terms of the water engineering for both supply and drainage, the standards should be separately verified on water fees, which shall be calculated separately from the water fees of water supply.

Article 28

The competent price departments and the competent water departments of provinces, autonomous regions and municipalities directly under the Central Government shall formulate the implementation measures according to the Measures and considering the actual local circumstance, and submit it for filing by the competent price departments and the competent water departments under the State Council.

Article 29

The Measures shall come into force on January 1, 2004. In case of any discrepancy between the relevant provisions enacted prior to the promulgation of the Measures and the Measures, the Measures shall prevail.

Article 30

The interpretation of the Measures is vested with the competent price departments jointly with the competent water departments under the State Council.