A survey of water prices in Ningbo: How water companies are losing money

Sun Wenxiang December 1, Ningbo residents of water prices officially adjusted to 2.75 yuan per cubic metre, and will be adjusted to 3.20 yuan next July 1.　　The water price adjustment, the residents of water prices will be divided into two steps, the final adjustment to 3.20 yuan, or 45.45%. Water price adjustment this year, the water supply sector party and government leaders attach great importance to public opinion propaganda and guidance, developed a detailed internal and external publicity plan ... "The dispute of Ningbo water price", "Ningbo responds to the water price question" and "Ningbo 4.8 billion to build modern water supply system", are all the water department writes good news draft,　　played a leading role. In the press release, the reasons for the rise in water prices are explained as "water price and cost upside down", "water costs increase" and so on, but the CBN reporter survey found that began in 2000 before and after a state-funded reform test stripped of the water purification business and moved into the capital market, the water company's huge profits were "　　".　　Reasons for the rise of the water company's press release said that high costs are the main factor in price increases. Wei Guanghua, director of the company's mission, said there were many factors.　　These include the increase of raw water price, the improvement of water environment and protection cost, the change of charging mode of water resources fee and the increase of water intake from reservoir. For example, "Ningbo's reservoirs are built in the mountains, from the waterworks are dozens of kilometers or hundreds of kilometers." Water plant production of piped water to the residents to the home and a distance, how to ensure that the water and tap water is not contaminated, it is necessary to build diversion and water supply works. "News of the draft also cited, for example, from the White Creek Reservoir diversion distance in the domestic farthest, and water points dispersed, the diversion pipeline total 350 kilometers."　　Therefore, compared to the direct use of river water or access to a single reservoir water close to the city, Ningbo people drink a higher cost. Water company predicts that the price of water for the city's urban water supply unit is 2.98 yuan per cubic metre and 3.45 yuan in the next two years, and the water price and cost are obviously upside down.　　Wei Guanghua clarified that, as a public welfare industry, water supply enterprises can not be a phenomenon of profiteering, "the current water price mechanism, reflecting the market supply and demand relations and price laws." But the question has never subsided since the start of the July price increase hearing.　　Once a netizen posted in Ningbo, said, if the water price rose 50% can only be protected, why the shares of Ningbo City Waterworks (Reporter note: This company in fact, Ningbo City Water purification Company) of Ningbo Fuda (Ningbo Fuda Electric Co., Ltd., 600724.SH) can be a huge profit from it? He inspected the Ningbo Fu Tatsu 2009 Year Quarterly discovery, the water purification business income 115.3219 million yuan, the business cost 61.8685 million yuan, gross profit margin reaches 46.85%.　　Other such as household appliances gross profit margin is 7.73%, real estate is 35.03%, cement manufacturing is 16.14%. According to media disclosure, prior to the cost of the audit process, usually by the "water Company" routine to Ningbo hairThe Commission cost Investigation Brigade provides the audit report and the financial statement, and through its examination and approval, transfers to the price management department room research, finally enters the hearing procedure.　　How to calculate the cost price?　　The reporter also noted that a copy of the information provided by the Ningbo Price Bureau showed that from the 2008 urban water Supply Unit price cost (2.29 yuan) composition, the raw water cost is 0.42 yuan, the cost of water production is 0.34 yuan, the cost of transmission and distribution is 0.86 yuan, the financial cost is 0.39 yuan, other costs are 0.28 yuan.　　In other words, the cost of water purification (including raw water and water costs) accounted for 33.19% of the cost of the price, but the cost of transmission alone accounted for 37.55% of the cost of pricing. 2008 financial data show that the main business of water company revenue 563 million yuan, but operating costs as high as 487 million yuan, financial costs are 124 million yuan, the final loss of 28.37 million yuan.　　Another netizen questioned the problem is the management cost, a Social Security department of the document shows that a number of water company employees Social Security base of more than 5000 yuan, and Ningbo average of more than 2,300 yuan. Reporter learned that Ningbo recent water price adjustment in 2006, the residents of water per cubic metre from 1.20 yuan adjusted to 1.65 yuan. Three years later, the price of tap water in Ningbo ushered in another adjustment.　　Frequent price increases invite many questions. According to the reporter understood that 2006 National development and Reform Commission price division had formulated "the city water supply pricing cost supervision and examination Method (trial) for the opinion draft", is intended to standardize the water price cost boundary and the pricing mechanism. During three, the draft was amended several years ago.　　It is reported that the new revised version has been completed, pending the final approval of the National Development and Reform Commission Regulation department. "Because of asymmetric information, it is difficult to constrain the cost of water supply companies, and the government's control over water prices depends on bargaining between governments and enterprises."　　June Tai law firm Shanghai Branch lawyer Zhu Jianjun told reporters.　　The water company was "lost"? The annual report shows that since 2007, the net losses of Ningbo water company amounted to about 55.54 million yuan.　　On the other hand, Ningbo Water Purification Company (hereinafter referred to as "water purification Company") in the past three years net profit of 101 million yuan, that is, the Ningbo netizens questioned the profiteering of water even more than real estate. How did the water company's losses arise? And how can water purification companies maintain such high profits?　　Another secret trading chain between water prices emerges. Reporter in the interview learned that Ningbo has a water company and water purification companies two water supply enterprises, the latter has Ningbo Jiangdong, southern suburbs, Cicheng, Meilin Four water plants, the main business is the production of tap water, supply.　　The annual inspection report of 2008 shows that the water company holds a 10% stake in the water purifier, and the Ningbo Urban Construction Investment Holding Co., Ltd. (hereinafter "the City of Ningbo") holds another 90% of the equity. In fact, as early as December 1999, four waterworks, which undertook most of the urban water supply tasks, transferred from the waterworks to the newly established Ningbo City for free.Account.　　Ningbo City Investment is a Ningbo government financing platform, the main function is to raise financing for urban construction. The following May, Ningbo City to invest in these four water plants as the main assets, registered set up in Ningbo City Water Company (hereinafter called "Water Company"), the day water capacity of 700,000 tons, can create a sales revenue of 105 million yuan.　　Ningbo Yongde Asset Evaluation Co., Ltd. issued by the evaluation report, as of March 31, 2000, Ningbo City, the investment of water company's fixed assets valuation value of 181 million yuan. Ningbo City, the move is to participate in Ningbo Fuda Electrical Appliance Co., Ltd. (hereinafter referred to as "Ningbo Fuda") 2000 allotment.　　Because in January 2000, free Yuyao Traffic Investment Co., Ltd. held the weight of 32.02% of Ningbo Fuda shares, Ningbo City has become the largest shareholder in Ningbo Fidelity. In June of that year, Ningbo Fidelity carried out a rights issue. Approved by the Ningbo Finance Bureau, Ningbo City to invest in water company's fixed assets with Ningbo Fu Tatsu 9848376 shares, according to the price of 10 yuan per share of the full subscription.　　The remaining fixed assets are acquired by the money funds raised.　　In the purchase of the rights issue, in order to ensure the Ningbo fidelity in this project the internal rate of return reached 21.75%, the water company nearly 90 million of the debt by the Ningbo City investment internal digestion.　　Another move is that the Ningbo City Investment and Water Corporation signed the "Tap water Sales Contract", the water company should promptly pay water to the moisture companies, and promised in the water company's assets as a whole entered the date, the city of Ningbo's full rights and obligations from the Ningbo Fu Tatsu inherited. Since then, the water company's assets have been moved into the capital market.　　2003, the water company is independent of the limited liability company, renamed to Ningbo City Water Purification Co. Although the provisions of the "tap water Sales Contract", which are excerpted from the 2000-year allotment prospectus in Ningbo, are not found to be detailed information on the price of the water supply. However, Ningbo Fuda Annual report shows that the 2008 water Purification Company produces 153 million tons of tap water, achieve total operating income of 115 million yuan, achieve net profit of 36 million yuan.　　This gross sales price of about 0.75 yuan/ton. It is puzzling that why should Ningbo's fidelity be placed in a "water purification company" that has little relevance to its main business?　　As a water purification company's only raw material provider and the only buyer of the products, the waterworks should not lack the right to bargain, but why the huge profits to the water purification companies to bear huge losses? April 2009, Ningbo Fuda and Ningbo City investment through the replacement of assets and Non-public offering shares of major restructuring plan.　　Which is known as the "relevance" of the small water purification company's stake in the evaluation value of 310 million yuan was set up to return to the city of Ningbo investment. The result of this asset maneuver is that the total capital of Ningbo Fuda will expand from 445 million shares to 1.445 billion shares, and become the real estate development and commercial real estate business as the main business of listed companies. Ningbo city is also holding 1.112 billion shares in Ningbo, accounting for 76.95% of total equity.　　CITIC Investment analyst Zhang Zhahui's report that the equity structure in the listed real estate companies are unique, the company has a lot of financing space, can continue to issue 778 million shares, while the city of Ningbo still has an absolute controlling power.　　Suppose the future cash issue price of 10 yuan, financial leverage of 4 times times, the company's future issuance can be cumulative driving nearly 40 billion yuan of investment. The water company, which no longer has the "profit" capacity to deliver, was written off in August 2009. The reporter obtained the "Ningbo Water Purification Co., Ltd. 2009 interim shareholder Resolution" showed that, due to changes in the mode of operation, the company's shareholders agreed to the water purification company for cancellation.　　Wang Junhai, head of liquidation group, is the legal representative of the Waterworks Corporation. Water purification Company was written off, according to the Ningbo 2009 water Supply Planning, the future urban water supply task will be mainly funded by the water company to build the Dong Qian Water plant, Mao Jia Ping waterworks and Beilun water plant three big big water plant commitment. But originally belongs to the water purification Company's Jiangdong, the southern suburbs two old water plants will gradually reduce the scale, the Meilin waterworks, the Cicheng water plant will realize the function replacement gradually, as the standby water plant.