The treatment facilities at Yanshan consist of four wastewater treatment plants with a total daily capacity of 129,000 cubic metres and two recycling units that will re-inject water into the manufacturing cycle with a total daily capacity of 40,000 cubic metres. They will treat water from the refinery and the six petrochemical units that make up the Yanshan industrial complex, as well as the domestic wastewater from the site.

According to the agreement, Sinopec Yanshan provides the land and the facilities while Veolia Water invests money equivalent to the value of the land and the facilities, for further technology upgrades and operation.

"A common problem with most State-owned enterprises is that we are big, but not strong, because we cover too many businesses. In order to become a strong competitor in the international market, we must concentrate on the core business," says Xu Chuanhai, director of Sinopec Yanshan's environmental protection department.

Sinopec Yanshan's wastewater treatment facilities used to be operated by a department within the company. The department, where more than 400 people worked, collected fees for wastewater treatment from each different petrochemical unit within the company.

"To the general manager of Sinopec Yanshan, it was like taking money out of his left pocket and putting in the right," Xu says.

The new joint venture with Veolia Water is an independent company, however. This means that petrochemical units will be forced to reduce their wastewater discharge if they want to pay the joint venture less money for wastewater treatment, Xu says.

And the joint venture, in order to increase its income, will try to improve its efficiency by using modern technology and management.

The joint venture could also earn more money by using the extra capacity of wastewater treatment facilities at the Yanshan industrial complex, Xu says.

"It could serve small clients around that area by using that extra capacity. In this way, idle equipment won't be wasted," Xu says.

Veolia Water estimates that the joint venture will be able to generate annual revenues of 580 million euros (US$691 million).  

Related story: Take the plunge