The move means the current monopoly enjoyed by the Shanghai Municipal Water Resources Bureau may gradually be eased.

The bureau currently supervises sewage-water treatment, oversees the affairs of the four tap-water companies, flood control during the rainy season, and explores local water resources, as well as protects the environment along the riverside.

"Overseas investors have shown interest in the sector and are already holding talks with agencies, but it is still a long way before investors finally get to see profits," Zhang Jiayi, general director of the Shanghai Municipal Water Resources Bureau, said yesterday.

Zhang's comments came ahead of World Water Day, which falls today. The United Nations devoted the day to highlighting the importance of the world's water resources.

Zhang indicated that investments will likely be in the several sewage-treatment plant projects in the city.

He said that the city plans to build 14 new sewage-treatment plants during the 10th Five-Year Plan period between 2001 and 2005.

About 12 billion yuan (US$1.45 billion) -- one-third of the total 36 billion yuan (US$4.35 billion) planned for the whole water-sector investment -- will be raised through social channels, including private firms and overseas investors, Zhang said.

This year, the city hopes to raise an estimated 1.6 billion yuan (US$ 193.5 million) from social investment, much of which will be utilized in sewage treatment, according to the bureau.

"Many well-known international water companies have already contacted us, seeking opportunities for cooperation," Zhang said. "But the state will still retain its control over the sector despite welcoming investments from private sectors."

International water-treatment and services companies like France-based Ondeo and British Thames Water Plc are already in talks with city authorities to buy ownership of some existing tap-water plants, Zhang said.

They have also expressed interest in water distribution. But that is unlikely to happen now, Zhang said, because authorities are unwilling to hand over the reins of the sector to the foreign firms.

"I think it is a matter of time that the local water-supply sector is opened completely to social investment," said Bai Yu, a spokesman for the British Thames company.

Bai said that his company is competing with two French companies to buy 50-percent ownership of Pudong Water-works Co Ltd's water-treatment unit.

(eastday.com March 23, 2002)