Inspection and Discussion

Zhang Guanghe, the leader of the inspection delegation from Shandong Province, observed the sewage treatment process closely, occasionally asking Jiang Hailin a few questions.

"Manager Jiang, can your technology be used for seawater desalination?"

"Our company has indeed experimented with it, and it is certainly capable of desalinating seawater." Jiang Hailin did not hide this aspect.

Zhang Guanghe's eyes brightened slightly: "I wonder what the desalination cost is? Can it achieve large-scale production?"

"The cost is manageable; it mainly involves the periodic replacement of the osmotic membranes, some electricity costs, and the harmless treatment of the filtered residue." Jiang Hailin lied through his teeth.

In fact, the heptagonal silicon oxide-graphene film could easily last for over a decade under high-intensity operation.

However, he certainly couldn't say that; otherwise, how would they make a profit? At worst, they would just perform periodic membrane replacements to create an illusion.

As for being discovered, they could always explain it away as a technological upgrade. In any case, these technologies and products would not be sold in the short term, and only a select few within the company were privy to the truth.

Meanwhile, Zhang Guanghe and his team were also considering several factors.

"Manager Jiang, if we were to build a seawater desalination plant, what would be the approximate ex-factory price of the desalinated water?"

Having been asked this, Jiang Hailin—whose technology transfer team was specifically responsible for the commercialization of scientific research results—had naturally studied commercialization plans for seawater desalination.

He pretended to think for a few minutes before stating a figure: "About 0.3 yuan per cubic meter."

"0.3 yuan?" Zhang Guanghe fell into deep thought. As for whether this price was expensive, it was comparable to, or even cheaper than, a typical water treatment plant.

This was especially true for Shandong Province, which had a highly developed heavy industry; the local water resources suffered from relatively severe pollution, resulting in higher treatment costs for local water plants.

Take the provincial capital of Shandong, Quancheng, as an example.

The ex-factory price of water from Quancheng's five water plants ranged from 0.6 to 1.2 yuan per cubic meter, a price significantly higher than 0.3 yuan per cubic meter.

"If we scale up, can we effectively lower the ex-factory price?"

Jiang Hailin thought for a moment and replied: "If the annual output exceeds 1 billion cubic meters, the cost could drop by another cent. The problem is that such a massive volume is difficult to consume locally, and we would have to build water pipelines, which is also a huge expenditure."

"1 billion cubic meters per year?" Zhang Guanghe gasped inwardly. One must know that the total water supply in Shandong Province last year was only 21.989 billion cubic meters, of which 2.871 billion was for residential use, 2.469 billion for industrial use, 16.276 billion for agricultural use, and 0.373 billion for ecological replenishment.

If the seawater desalination plant invested in by Suiren Company could produce 1 billion cubic meters of desalinated water annually, it would basically account for one-third of the entire province's residential water consumption.

The problem that followed was how to transport the water.

After all, not every city was a coastal city, and before coming here, Zhang Guanghe had heard rumors about how Pengcheng had hit a wall with Suiren Company.

He estimated that regarding Daocheng, because of the sewage treatment plant project involving Veolia Company, it would be difficult for Suiren Company to agree to coexist with them.

Sure enough, in the subsequent conversation, the cooperation plan presented by Jiang Hailin was an all-inclusive package deal that did not allow for the establishment of independent water plants to supply the water utility companies.

After two days of negotiations, with no consensus in sight, Zhang Guanghe finally went to the headquarters of Suiren Company to meet with Huang Xiuyuan.

In a small office at the headquarters.

"President Huang, we are very sincere on our end. If we can reach a cooperation, it would also be excellent publicity for your company."

Huang Xiuyuan was unimpressed by this and asked a very realistic question directly: "If the seawater desalination plant is built, how can we guarantee profitability?"

Zhang Guanghe wanted to explain something, but Huang Xiuyuan raised his hand: "Director Zhang, let me finish. By profitability, I mean how the local water utility companies will make a profit?"

"Uh..." This question caught Zhang Guanghe off guard. He asked in confusion: "Does this have anything to do with the profitability of the local water utility companies? The desalinated water from the plant is, of course, sold directly to the water utility companies, and they are responsible for their own profits and losses."

"Of course it has to do with it. If the water utility company cannot make a profit, and they happen to encounter local fiscal difficulties, may I ask if the water utility company will pay on time? I'm afraid that is an unknown."

Faced with Huang Xiuyuan's bluntness, Zhang Guanghe felt quite embarrassed. Upon deeper reflection, he realized this possibility did indeed exist.

When private enterprises do business with state-owned enterprises, the most common issue is the frequent delay of payments.

Moreover, water supply projects are inherently sensitive and are a basic necessity for people's livelihoods; one cannot simply cut off water to a utility company because of unpaid debts.

In this way, the seawater desalination plant would be in a very passive position during the cooperation, a situation Huang Xiuyuan was unwilling to see.

"I believe Director Zhang is well aware of this situation. Among the various local water utility companies at present, the actual profit is likely negative, isn't it?"

Zhang Guanghe nodded helplessly. Before coming to Shanmei, he had investigated some conditions; the Quancheng Water Affairs Company alone lost 1.5 yuan on average for every cubic meter of tap water sold.

In other words, the residential water supply in Shandong Province lost over 4 billion yuan annually. If not for fiscal subsidies, these water utility companies would have gone bankrupt long ago.

Zhang Guanghe was also caught in a dilemma: "President Huang, although there are precedents for private and foreign capital contracting water utilities—and your company has even contracted the Hui City Water Affairs Company—contracting the water utilities for the entire Shandong Province is simply too massive."

Huang Xiuyuan took out a document and handed it over: "How about this: Shandong Province and our company form a joint venture to establish a general water utility company. We at Suiren only need 5% of the shares, but we require full management rights."

"5% of the shares? Full management rights? Can your company make the water utility company profitable?" Zhang Guanghe became curious.

"We can actually do the math. Regarding water fees in Shandong, industrial water is 2.4 billion cubic meters, and residential water is 3 billion cubic meters..." Huang Xiuyuan said while writing down some data on a piece of paper.

With 2.4 billion cubic meters of industrial water and 3 billion cubic meters of residential water, at an average retail price of 3 yuan per cubic meter including sewage treatment fees, this meant a total annual turnover of 16.2 billion yuan. Even if there were cases of water theft, at least 80% could be collected, resulting in a turnover of 13 billion yuan.

In reality, if commercial water was separated from residential water, and the fees for a portion of agricultural water were added, the total water fee turnover in Shandong could definitely reach around 18 billion yuan.

Meanwhile, the ex-factory price of Suiren Company's water plant was 0.3 yuan per cubic meter. Supplying 6 billion cubic meters of purified water a year would only cost 1.8 billion yuan.

Subtracting the sewage treatment fee of 0.8 yuan per cubic meter, that was 4.8 billion yuan.

After some calculations, it only cost 6.6 billion. Where did the remaining 10 billion-plus go? Even if 30% of the annual turnover was invested in maintaining and upgrading pipelines and equipment, that would only cost about 5.4 billion.

That still left about 6 billion in turnover. Surely labor costs couldn't be 6 billion?

The 16 prefecture-level city water utility companies had at most 16,000 employees. Even with an average annual salary of 100,000 yuan per person, plus other expenses and benefits, the expenditure would be at most 2 billion.

Where did the remaining 4 billion go?

If the previous ex-factory price of tap water was too high, causing this 4 billion to be spent in that area, it might be excusable.

But if Suiren Company took over, this 4 billion would become a profit point.

Seeing this, Zhang Guanghe couldn't help but ask: "In other words, if the water utility is handed over to your company for management, it can achieve profitability?"