E-mail: michael@shboqu.com   |   Expert in Water Quality Measurement and Water Treatment Project

The future development trend of the sewage treatment industry

by:BOQU     2023-03-27
Do you know the future development prospects of my country's water treatment industry? The demand for water treatment is actually a fixed industry. We must first look at the demand. Starting from nothing is a process, and this process broke out around 2015-2017. In February 2015, the 'Water Ten Articles' was reviewed and approved, written on April 2, 2015, and released and implemented on April 16, 2015. This has basically established a round of high-density water treatment investment in my country. At that time, there was a goal in the water ten measures: by 2020, the proportion of water quality in the seven major river basins should be more than 70%. The black and odorous water bodies in the built-up areas of cities at the prefecture level and above are all controlled within 10%, and the proportion of centralized drinking water sources meeting or better than Class III is generally higher than 93%. The proportion of poor groundwater quality is less than 15%. Nearly 70% of the coastal waters have good quality. The proportion of water bodies inferior to the fifth category in the Beijing-Tianjin-Hebei region has dropped by about 15 percentage points. The Yangtze River Delta and Pearl River Delta regions are inferior to the fifth category. To sum up, there are indicators for specific good and bad. With the deepening of waste control and treatment in our country, the water body has actually reached this standard, and some areas have even exceeded the task. In fact, many provinces and cities have already set the goal of eliminating black and smelly water in 2017. The governance method is the river chief system that assigns responsibilities to the grassroots, and in terms of infrastructure, it is to build sewage treatment plants. The overall saturation of sewage treatment By the end of 2017, my country's urban sewage treatment rate was 94.54%, and the target for 2020 is 95%. Entering 2020, urban sewage treatment capacity will only be overfulfilled. County sewage treatment has exceeded 90% in 2017. In fact, planning requirements have been exceeded. In 2017, the sewage treatment in villages and towns was probably left. At that time, the sewage treatment in villages and towns was only 50%, and the target was 70% or even higher. It seems that there is still the big cake of townships in terms of new treatment plants. However, it should be noted that my country has a vast territory, and at the township level, there are densely populated areas in the east that have actually reached sewage treatment, and scattered villages in the west that are actually uneconomical for sewage collection. In fact, the sewage treatment facilities around the main river basins have basically been put into operation. Sewage treatment plants should not only consider social efficiency, but also use efficiency. If the amount of sewage discharged is small, then building a sewage treatment plant will appear wasteful. In the PPP and special project company models, the water treatment bonus period has passed, and the future is the era of operation. In the past few years, the sewage treatment industry has two operational characteristics. One is PPP. The PPP project is that the private sector contributes to the construction of the government and makes money by operating the sewage treatment plant. However, the sewage treatment fee is actually a relatively fixed income, and some sewage treatment plants have already been unable to eat enough. Therefore, the PPP model has led to the early arrival of the saturation of the sewage treatment plant. In the field of people's livelihood, the price increase of sewage treatment fee affects the whole body. Because most sewage treatment fees are actually included in the water fee. The water consumption does not fluctuate too much from year to year. The increase in processing capacity will not lead to an increase in demand, so there will be some idleness. In this way, PPP is actually more like a kind of local government financing. Because there is no pressure on local finances, too many sewage treatment projects have been launched in one go. In 2017-2018, most of the construction units of sewage treatment plants showed a trend of heavy assets, that is, they gradually became high-debt and high-asset enterprises. If it is a general contract, the sewage treatment plant will become a kind of inventory, and it can become a sale after delivery. But if it is a PPP, the sewage treatment plant becomes an intangible asset and will not disappear in the asset. And because the recovery will be in the next few years, companies need more financing to leverage the hoarding of these assets. To put it bluntly, enterprises that build sewage treatment plants used to only focus on construction, but now they also manage operations. The second is the special project company model. For example, a sewage treatment construction unit, he invests in setting up a company in a land, the local government contributes a sum of money, and the enterprise contributes a sum of money. For example, if each contributes 10 million, then the enterprise has assets of 20 million. Then get a loan through this enterprise, such as 50% debt, then 40 million, build the project, and then operate it. It depends on whether the local government will buy back the shares or let it go directly to private capital. This is a by-product of PPP. But the possible problem with this pattern is. Some companies make financial reports through opaque consolidation. Some are consolidated, some are not. This will make enterprises in the sewage treatment industry quite complicated. There is even a problem of financial inflatedness. The sewage treatment industry is not optimistic for the time being. We are optimistic about the sewage treatment industry in 2017 and before. But after 2017, we completely changed our view. For this industry, construction period dividends. The so-called sewage treatment plant started from scratch. But once saturated, its industry elasticity is relatively poor. We believe that some equipment manufacturers in the sewage treatment industry can still survive, such as permeable membranes, because there are more sewage treatment plants and equipment must be updated. But this amount is already very limited. The bonus period of the sewage treatment industry has passed, and the future depends on operations. The operation is somewhat similar to the highway industry, but the sewage treatment plant is also the same as the highway industry. Have you seen the high-density traffic in the east, and the sparse traffic in the west? The key is that the demand is stable, and the price increase depends on the policy. Enterprises in the sewage treatment industry generally have excessive debt leverage. There are still opportunities in the future, and the opportunity lies in price increases, not in construction.
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