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Preferential polices to lure foreign companies or domestic private enterprises to invest in China's garbage-treatment sector in the urban areas have been announced by the State Environment Protection Administration (SEPA).

The administration hopes to reduce the huge fiscal burden on garbage treatment by attracting financing both from home and abroad.

The key features are:

Foreign and private investors can set up plants and generate power through garbage incineration or gas from garbage landfills.

Investors can sell the electricity to Chinese power grid companies in accordance with contracts signed with the Chinese Government.

The power plants can enjoy the same preferential policies granted to environment-friendly enterprises.

Chinese electricity grid companies are required to buy power from the power plants at a reasonable price, which should cover investment costs and ensure appropriate profits.

The garbage-treatment enterprises can enjoy preferential import tariffs and valued-added taxes when buying key equipment from overseas.

The State Development Bank will be asked to offer financial support to the enterprises.

The central government has attached increasing importance to environment-friendly garbage-disposal projects, and has listed it as one of key industries enjoying priority support.

During the Ninth Five-year Plan period (1996-2000), China produced about 140 million tons of garbage a year, of which only 63 percent was treated, and even then, the treatment was not up to environment-protection standards.

China now has about 1,000 large-size buried rubbish heaps, only 90 percent of which use simple treatment.

To improve garbage-disposal technology, the government started a series of programs through co-operation with the United Nations Development Program (UNDP), and selected several cities such as Nanjing, Anshan and Ma'anshan to popularize advanced technology.

But most cities have financing problems and the administration hopes to attract foreign or private capital.

The Chinese Government will release information on some of the projects publicly and organize a fair which will promise an open and equal business environment for investors.

(China Daily November 5, 2002)