The Renhuai city government in Zunyi, Guizhou province, violated laws and regulations when it took over a wastewater treatment plant in June 2022, and operational control has since been returned to the operating company in 2026, according to an official statement issued on Thursday.

The report from a joint investigation team formed by Zunyi officials said the takeover followed the Renhuai government's finding that the project company had committed serious breaches of contract. Sewage treatment volumes failed to meet agreed levels, and there were environmental risks, including potential pipe bursts and wastewater overflows.

The Renhuai government imposed a temporary takeover without going through procedures such as notification and hearing, which was inconsistent with relevant laws and regulations, and its act of terminating the contract was not in accordance with the project agreement, the report showed.

A subsequent probe found the company, Guizhou Taike Lingxiu Environmental Protection Co, failed to fulfill production-safety responsibilities, resulting in two deaths. Investigators also uncovered problems with the company's financial management.

On Feb 4, operational rights for the Anlongchang wastewater treatment plant were handed over to Guizhou Taike. Officials said they would supervise the company's ongoing performance under the contract.

Zunyi has referred suspected disciplinary and legal violations identified in the investigation to supervisory authorities for accountability, in accordance with regulations and the law.

The project operator was established by a Chongqing company and other investors, including a representative of a local government investment arm. The wastewater plant began trial operations in January 2021.