Du Jianguo, an independent scholar, said Veolia should be held accountable for the frequent occurrence of water contamination incidents. "It shows Veolia doesn't pay attention to water safety issues in China at all," he said. Du is one of the most radical among the advocators that demand Veolia be banned from the Chinese market.

Furthermore, Du said public utility sectors, such as water, public transportation, hospitals, railways and electricity supply, are not suitable for market-based operation and should ban private or foreign investment.

Over 10 days after the Lanzhou pollution incident, Lanzhou Veolia apologized for the first time and promised to replace some of the pipelines. After taking over the local water supply operation in 2007, Veolia didn't revamp the overused pipelines. The vulnerable pipelines make it easy for pollutants to seep into the tap water.

After expensive purchases, Veolia ruthlessly cut operation costs and continuously pressured local authorities to raise water prices instead of focusing on renewing equipment and technologies. Hefty investment didn't bring about the previously expected profits. Therefore the company has not been motivated to bring advanced management concepts or technologies to China, according to a report from Beijing Youth Daily.

Wang Zhansheng, a professor from School of Environment at Tsinghua University, said he was surprised to see that Veolia didn't have a backup water source or contingency plan in the face of the crisis.

"Regulations say that tap water should have at least two sources so that when one source is contaminated, another can be used as an alternative. Even if the Yellow River is the only water source for Lanzhou, Veolia should use different reaches of the river as backup sources. Also, Veolia should have had a contingency plan. Once the water source is polluted, the plan should be immediately launched. What's taking them so long to solve the problem?" Wang asked.

Who is to blame?

Veolia was widely held accountable, but it shouldn't be the only one blamed for the incident. A lack of more detailed daily tests in the water business industry is apparently one cause.

Veolia detected excessive levels of benzene on April 10 but reported to the Lanzhou Municipal Government one day later. When facing public questioning on the alleged late report and cover-up, Yan Xiaotao, Deputy General Manager of Lanzhou Veolia Water, said benzene was not a mandated test item for tap water in China and the company had "accidentally" discovered the problem.

China adopted compulsory drinking water criteria in July 2012 and the number of indicators increased to 106 from the previous 35. Comprehensive quality tests for tap water are required to be conducted every six months, while daily tests do not include checks for benzene.

Worse still, China's tap water market is regulated by many government departments, which makes the supervision process difficult. The responsibility for overseeing different links in the supply chain, such as drawing water from the river, fining water supply companies, transferring water and testing water, belong to four different departments. Once pollution incidents happen, local authorities can be very slow to react.

Lanzhou is just one case of many in China's troubled tap water market. Most culverts in China have been used for many decades without appropriate maintenance, sowing the seeds for hidden troubles.

Du Ying, former Vice Minister of the National Development and Reform Commission, said that due to incomplete reform on water prices, 30 percent of tap water supply companies and 25 percent of sewage disposal companies in China are operating at a loss. A lack of capital makes it impossible for those companies to maintain pipelines and carry out technology innovation.

Lanzhou is a heavily industrialized city. Its tap water pipeline is surrounded by many chemical firms. In spite of this, Veolia did nothing to maintain or improve the pipeline.

Li Zhihui, a senior water business expert, said this was all caused by the previous expensive purchase. "The Lanzhou Municipal Government sold the stake by bidding. The one with the highest bid will get the stake," Li said. "The nature of capital is pursuing profits. The higher the purchase price is, the stricter the price control will be."

"Using public utilities as a tool to make money will inevitably lead to tragedy. Therefore, the mindset on public utility reforms should be changed. The two sides should construct, share and develop public utilities together. It can't be a once-and-for-all selling," said Li.

When responding to public outcry for banning foreign investment in the public utility sector, Luo Jianhua, Secretary General of the China Environment Chamber of Commerce, said the market-oriented reform should not stop because of one incident. "One shouldn't stop eating only because he was choked."

Advantages brought about by market-oriented reforms on water business industry outweigh those disadvantages. Ever since China opened up its public utility sectors in 2002, private and foreign investment have entered many areas including water supply, natural gas supply, heat, sewage disposal and waste disposal industries. It has greatly improved China's utility conditions and increased efficiency, he added.

"A market-based mechanism should be adopted in which the government is responsible for improving the law, strengthening supervision, encouraging competition and avoiding monopoly while companies focus on improving services. The two sides should share profits, risks and responsibilities," Luo said.

Luo said it's irrational to resist foreign investment in the public utility sector. "Whether the introduction of foreign investment will affect a city's water safety is ultimately dependent on whether domestic firms are strong enough to compete with them. More importantly, it depends on whether local governments have enough supervision."

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