Representatives of Shenzhen bureaus gathered Tuesday to discuss a draft regulation for public utility franchises centered on access to the market for private enterprises and the monitoring of franchise enterprises.

Public utilities provide electricity, water, gas and public transport services.

Since they are usually monopolies, there are no competitors and consumers have no alternatives. Monitoring their expenditure is particularly important.

"We should speed up the establishment of a public utility monitoring committee comprising professional staff such as accountants and lawyers," said Xu Youjun, deputy director of the Shenzhen Legal Affairs Office. He also emphasized that the franchise enterprise should separate the public utility business from other commercial projects. "This way, we can prevent them from shifting the risk of commercial activities to the public."

Cai Yu of the Shenzhen Municipal Development and Reform Bureau drew on experience from Hong Kong.

"The Hong Kong SAR Government usually sends a government representative into the public utility enterprise to keep abreast of and monitor its daily operations," he said. Cai said this kind of internal monitoring was more effective as a precaution to avoid big problems.

While strongly agreeing with Cai's suggestion, Lan Jianhong of the Shenzhen Water Resources Bureau suggested the regulation should involve the compulsory public disclosure of the enterprise's financial statements. He also questioned the current market access system. "We now have a form of bidding by invitation that is in between public bidding and agreement, which is not fair enough. The contract term is too long with some even reaching 50 years," he said.

Lan suggested the current form of access be replaced by public tender and comply with the international practice of a contract term to a maximum of 20 years.

Source: Shanghai Daily News