Environmental protection industry opens up new directions China's wastewater treatment costs will increase soon

The "Several Opinions on Promoting the Reform of the Price Mechanism" has been issued, and the document clearly proposes to raise the standard for charging wastewater treatment. With the help of policies such as “Water Ten Articles” and PPP, in the future, the market-oriented operation of the water industry is expected to break the pattern and enter a new stage of development.

The State Council recently released "Several Opinions on Promoting the Reform of the Price Mechanism" to boost upward expectations for sewage treatment fees. Guotai Junan believes that “water ten” will increase the control of municipal sewage treatment and open up the imagination of the market.

The rise of urban sewage treatment market

"Water 10" is feasible for the quantitative target of municipal sewage treatment. According to 90% of the average treatment rate of cities and counties in 2020, the urban sewage market can reach 70 billion tons and the market space is large.

At the same time, according to the 2008-2020 Analysis and Forecast of China's Environmental and Economic Situation released by the Environmental Planning Institute of the Ministry of Environmental Protection and the National Information Center, with the normal improvement of treatment levels, China's wastewater treatment during the “Thirteenth Five-Year Plan” period ( Including governance investment and operating costs) will reach 139.22 billion yuan; and under the established control objectives, China's wastewater treatment input will reach 1,560.3 billion yuan during the "13th Five-Year Plan" period.

At present, the concentration of urban sewage treatment industry is low. In 2012, the CR1 and CR10 of the industry were 6.53% and 25.03%, respectively. The reason for this was that: the sewage treatment industry was licensed by the government, and local enterprises formed the franchise rights by 20-30 years. Regional market barriers to entry and market fragmentation. In the future, this market pattern is expected to be broken through the cross-regional operations of market-oriented water companies.

Sewage treatment fee increases soon

The expectation of raising the sewage treatment fee was born on October 15. The State Council issued the “Several Opinions on Promoting the Reform of the Price Mechanism”, which clearly stated that the sewage treatment fees should be reasonably raised.

At the same time, one-third of the provincial capital cities in China still do not meet the treatment fee standard set in the “Water Ten Article”; the gap between the level of China's sewage treatment fees and other countries is still less than the upper limit of acceptable prices for residents; refer to the reasonable profitability standards for the water supply industry. Sewage treatment fees still have a 20%-40% price increase.

In addition, the PPP model has strong feasibility and large potential in the municipal sewage treatment market, and it is expected to improve the financial difficulties of the sub-sector industry. On the one hand, municipal wastewater treatment companies have heavy assets and high asset-liability ratios, and market expansion is subject to capital turnover. The PPP model can compensate for the shortcomings of heavy asset operating models in the industry through supporting financing policies; on the other hand, it is optimistic about the sewage treatment of PPP projects. The promotion of the field.

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