A thesis submitted in partial fulfillment of the requirements for the degree of Master of Engineering, School of Civil Engineering

Thesis (M. Eng.) - Asian Institute of Technology, 1994

The present research investigates the transformation of financial performance of selected water supply enterprises in Henan Province, China. Factors affecting financial performance are identified, requirements to achieve financial soundness are analyzed and financial policy suitable to various conditions are recommended through numerical analyses. Functions of enterprises, stability of available water resource and profitability of crop cultivation are identified as factors decisively affecting financial performance of water supply enterprise. Water supply enterprise with single function of irrigation requires stable water resource available, and highly profitable cultivation such as cotton supported by fertile soil to achieve financial balance. Multi-functional water supply enterprise located in less fertile area also needs about 4% of net benefit of crop cultivation as irrigation charging, which approaches the maximal farmers' contribution according to the past record. Recommendations at water supply enterprise level are: a). diversification of enterprise functions including side business; b). introduction and expansion of more profitable crop cultivation; c). Farmers should increase contribution in project operation and maintenance. Recommendations at provincial bureau level include: a). Water supply enterprise should be entitled to collect charge on groundwater use within the command area; b ). subsidy to water supply enterprise should not be cut especially in case that it is single functional enterprise and located in less fertile soil area; c). Stability of available water resource should be ensured to individual water supply enterprise through provincial· level organization and reservoir construction, if necessary.