AT least three Chinese State-owned enterprises are bidding for a German waste management company, underscoring China’s desire to acquire advanced technology to tackle a growing refuse problem, people familiar with the matter told Reuters.

    The rare bidding war between government companies is also a sign that China is giving greater freedom to its State-owned enterprises (SOEs), as part of President Xi Jinping’s reforms of the country’s sprawling government entities.

    Chinese State-backed Beijing Enterprises Water Group Ltd., China Everbright International Ltd. and Beijing Capital Group are among the suitors who have submitted initial bids for Energy from Waste (EEW), the people added.

    It is Europe’s market leader in energy-to-waste and valued at 1.5-2 billion euros (US$1.6-US$2.1 billion), they said.

    If successful, the deal would mark China’s biggest outbound M&A in the sector in about 16 years, according to Thomson Reuters data.

    China had set a target to spend about US$16 billion between 2013 and 2016 to improve sewage disposal and garbage treatment, domestic media said.

    Swedish buyout firm EQT put the company up for sale after taking full control of the waste-burning power producer, Reuters reported in September.

    It is currently drafting a vendor due diligence report, reviewing the tentative offers and will soon shortlist several bidders, with a view to signing a deal in early 2016, the sources familiar with the process added.

    Heavy Chinese interest and competition among State companies for an overseas asset comes as the government struggles to cope with an acute environment and waste recycling problem.

    China needs top notch waste management technology to convert the enormous amounts of refuse the world’s most populous country generates.

    “EEW has state-of-the-art emissions control technology and also employs a very efficient garbage collection management system,” one person familiar with the company said.

    Waste treatment and recycling has emerged as one of China’s biggest challenges as it tries to tackle pollution and ease pressure on its depleted and contaminated water and soil.

    Government researchers have estimated that as much as 7 billion tons of waste is buried around China’s major cities.

    To ease the problem, China aims to convert 30 percent of its rubbish to electricity by 2030, up from less than 5 percent now.

    However, plans to build waste-to-energy power plants have routinely been opposed by residents alarmed at pollution risks.

    EEW has long-term contracts for accepting waste and for delivering energy, process steam and heat. Like grids or pipelines, it generates stable returns, making it attractive to waste management companies.

    EQT hired Morgan Stanley to run the sale process and the asset is being heavily marketed in Asia, the people said.(SD-Agencies)