An entity that intends to operate a water supply enterprise shall apply to the water conservancy authority for water right registration, and obtain approvals for constructing, renovating, or dismantling hydraulic structures related to water right or water source.
The application pursuant to Paragraph 1 hereof shall be examined and forwarded by the authority-in-charge of water supply enterprises.

Within one year from being granted the water right, an entity intending to operate a water supply enterprise shall submit an application together with the construction and operation plans to the county (city) authority-in-charge for approval of exclusive operation right by the central authority-in-charge. Only after obtaining the certificate of exclusive operation right can the entity commence the water supply works. If the construction work is located in a municipality, the applicant shall submit the documents to the municipal authority-in-charge for approval.
The municipal authority-in-charge shall file the approval of exclusive operation right pursuant to Paragraph 1 hereof with the central authority-in-charge. If there are two or more private entities applying for exclusive operation right in the same area, the central or the municipal authority-in-charge may notify all private entities concerned to settle the matter within a specified period. Where no agreement is reached, the dispute shall be decided by the central or the municipal authority-in-charge.
The required information to be stated in the construction and operation plans pursuant to Paragraph 1 hereof shall be stipulated by the central and the municipal authority-in-charge respectively.

When rejecting the application of exclusive operation right, the central or the municipal authority-in-charge shall notify the water conservancy authority to revoke the water right of the applicant.

The certificate of exclusive operation right shall state the following information:
1. The name and location of the water supply enterprise;
2. The person-in-charge of the water supply enterprise;
3. The registration number of water right certificate;
4. The water service area;
5. Major water supply equipment;
6. Capital; and
7. Other required information.
The information on the certificate pursuant to the preceding paragraph shall not be changed unless with the approval of the central or the municipal authority-in-charge. A new certificate of exclusive operation right shall be issued if there is any change to the certificate.

The duration of exclusive operation right is 30 years from the date of grant.

For the purpose of standardizing the application, approval, and revocation of exclusive operation right, the central authority-in-charge may promulgate the regulations governing the exclusive operation right of water supply enterprises.

After an entity that intends to operate a water supply enterprise has been granted the certificate of exclusive operation right and in any of the following circumstances relating to the implementation of construction and operation plans pursuant to Paragraph 1 of Article 25 herein, the central authority-in-charge will revoke its exclusive operation right as informed by the county (city) authority-in-charge, unless the entity has been granted an extension by the central or the municipal authority-in-charge by showing reasonable causes; the revocation of exclusive operation right will be effected by the municipal authority-in-charge if the circumstance occurs in the municipality:
1. The work has not commenced in three months after the approved date of commencement;
2. The work has not been finished in one year after the approved date of completion; or
3. Water supply has not begun in three months after the approved date of water service.

After finishing the construction of facilities, an entity that intends to operate a water supply enterprise shall not start operation until it has passed the inspection of central authority-in-charge and received the business license. An entity who submitted the application to municipal authority-in-charge shall not start operation until it has passed the inspection of municipal authority-in-charge and received the business license.
Water right and water source related hydraulic structures that require application to the authority in charge of water work for approval pursuant to the Water Act shall be inspected by the same authority.

Unless approved by the central or the municipal authority-in-charge, a water supply enterprise shall not cease business. A water supply enterprise that has been approved to cease business shall turn in its business license to the central or the municipal authority-in-charge for cancellation within thirty (30) days after the approval.

The delivery line of a water supply enterprise may pass through water service areas served by other water supply enterprises with the approval of the authority-in-charge.

Except under the following circumstances, a water supply enterprise shall not supply water beyond its designated area:
1. Having the approval of the authority-in-charge to supply water to another water supply enterprise.
2. Upon the order of the authority-in-charge to supply water to national defense industry.
3. Having the approval of the authority-in-charge to supply water to residents who live in areas without tap water and request water supply.
4. When another water supply enterprise in adjacent areas stops water supply due to a disaster or other emergency events and can not repair the equipments in time, that urgent and temporary water supply is necessary.

The transfer of a water supply enterprise is subject to the approval of the central or the municipal authority-in-charge, and effected by the issue of a new certificate of exclusive operation right.

The exclusive operation right shall not be the subject of hypothecation or any other rights except for transfer.

Deleted

A public water supply enterprise shall apply for renewal of exclusive operation right one year before the expiry of right; the authority-in-charge may take over a private water supply enterprise upon the expiry of its exclusive operation right by notifying said enterprise of its decision two years before the expiration date.
For a private water supply enterprise that the authority-in-charge decides to take over after the expiry of its exclusive operation right, the authority-in-charge may set a date for take-over, and negotiate or determine the purchase price according to Article 14 herein.
If the authority-in-charge did not notify a private water supply enterprise of its decision to take over according to the provisions above, the authority-in-charge should grant approval if said water supply enterprise applies for renewal of exclusive operation right.
The exclusive operation right may be renewed for a period of ten years each time.

A private water supply enterprise that does not intend to continue the operation after the expiry of its exclusive operation right shall submit its intention to the central authority-in-charge through the county (city) authority-in-charge two years before the expiry; the water supply enterprises in a municipality shall submit their intention to the municipal authority-in-charge.
After receiving the intention under Paragraph 1 hereof, the central or the municipal authority-in-charge should proceed to plan the transfer to a public utility or offer it to the public for take-over. Where the matter is handled by the municipal authority-in-charge, the municipal authority-in-charge shall report the process to the central authority-in-charge for future reference.

Where a private water supply enterprise is to be transferred to the government and the parties concerned cannot reach an agreement on the purchase price, the government and the private entity will each appoint two experts, who in turn will jointly recommend another expert to form a five-person valuation commission to determine the price by the following methods:
1. Appraise the price based on the total existing assets of the water supply enterprise.
2. Appraise the price based on the start-up costs of the water supply enterprises, and the prices of all assets bought and improvements made during the operation period less the prices of scrapped equipment, allowance for depreciation, reserves set aside, and user provident fund.
When no agreement can be reached on the appointment of the fifth expert pursuant to Paragraph 1 hereof, the experts appointed by both parties will each name two or more experts for the court chosen by the government and the private entity to decide.

The real property and water supply equipment managed or owned by a water supply enterprises shall not be disposed or hypothecated without the prior approval of the central or the municipal authority-in-charge.
Any disposal or hypothecation that violates Paragraph 1 hereof shall be invalidated.