Water company tapped for including banquet fees in production cost

Guangzhou Water Supply Company has come under fire for including the company's expenses for banquets and other reception fees into the production cost of tap water, and shifting the extra costs onto consumers.

Local media recently reported that the tap water production costs announced by the company were nearly 17.3 percent higher than the figure ratified by the city's price bureau.

That means it collected more than 400 million yuan ($63.5 million) a year extra from local tap water consumers.

Han Zhipeng, a member of the Guangzhou Committee of the Chinese People's Political Consultative Conference, said it was understandable that the water supply company would seek to raise its water rates as production costs had grown.

"But the company should not shift the extra costs for banquets and receptions onto residents and consumers," he said.

He urged the water supply company to make its operations more transparent.

The company refused to comment.

Starting May 21, the company raised its water rates to 1.98 yuan a cubic meter, up from the 1.32 yuan a cubic meter they had been set at since 2006.

The company said it cost 1.716 yuan to supply a cubic meter.

According to the account book published on its website, the company is deep in the red. The company had a deficit of 50 million yuan in 2008, which grew to 390 million yuan in 2010. And it now has to pay interest of more than 416 million yuan a year to the bank and is heavily in debt.

It is not known how much was spent on banquets and reception fees.

Many local residents have also been opposed to a water rate increase.