Private Investment in Urban Utilities

On December 27 2002 the Ministry of Construction published its Accelerating the Marketization of the Urban Utilities Industry Opinion (the Opinion) as part of an ongoing effort to attract private investment in the utilities sector. The Opinion formalizes the Ministry of Construction's views on the ongoing trend toward privatization of public utilities and provides a general administrative legal basis for such privatization in the sectors that are administered by municipal and township governments. However, by their own admission, the Opinion fails to provide much detailed guidance on the crucial legal issues most relevant to private investment.

Privatization and Foreign Investment

The Opinion consists primarily of broad policy statements on privatization with a handful of unremarkable provisions on the concession process. Accordingly, the Opinion is sketchy and vague for a legal document, and published reports have indicated that detailed operating rules will be forthcoming. The Opinion also explicitly recognizes that relevant legislative work must be accelerated to clarify various ambiguities such as the rights and obligations of investors and the legal relationship between the relevant government department and investors and operators.