"The industry is starving for non-state capital," said Pan Yue,vice-director of the State Environmental Protection Administration(SEPA), here Tuesday.

Urban sewage reached 24.76 billion tons in 2003, accounting for53.8 percent of total waste water of the country. Unfortunately, over 60 percent of the country's 660 cities do not have any treatment plant.

Pan Yue said this should be primarily blamed on the lack of funds.

According to a cleaning plan set in 2001, the sewage treatment rate has to reach 45 percent on average and exceed 60 percent in cities with a population of over 500,000.

The government promised to collect 120 billion yuan (14.5 billion US dollars) to reach this goal in 2001. While the treatment rate lingered at mere 22.3 percent in 2003, SEPA admitted that financing is "more difficult than it has imagined".

Pan believed that it is urgent to let private investors enter the industry. He said the government encourages private investmentin the Build-Operation-Transfer and Transter-Operation-Transfer models, and will provide favorable policies in taxation, land, electricity, and credit guarantee.

To guarantee investor's profits, the government will soon enforce the emission fee levying system throughout the country, which was required by a 2003 regulation but has not been established in most areas.

Pan said it is also important for the government to regulate and oversee the quasi-public service in order to avoid risks possibly brought by profit-oriented investors.

According to him, SEPA is going to make standards on construction, operation and technology for industrial players. Besides, contractors can only be chosen through public bidding.