Shanghai's new regulation to prevent the use and collection of restaurants' waste oil takes effect on Friday, and businesses that break the law could face a fine of up to 100,000 yuan ($16,000).

The regulation is the city's latest attempt to curb the use of "gutter oil", or reprocessed kitchen oil that is illegally recycled and then used at restaurants.

Officials said a seamless system will be built by establishing a complete and new management chain in Shanghai. "We used to regard the waste oil as garbage, and restaurants needed to pay a 'garbage fee' to the government for its disposal. But from now on, it joins the list of 'resources' that we'd purchase from restaurants at a fair price," said Liu Ping, an official with the Shanghai government's legislative affairs office.

Such price setting would be guided by the Shanghai Restaurants Cuisine Association, Shanghai Food Association and Shanghai City Appearance and Environmental Sanitation Association to ensure "fair trading", according to Cui Liping, deputy Party chief of the Shanghai Landscaping Administration Bureau.

"I believe it would be a fairly attractive price to prevent the waste oil leaking into the black market as we listened to both opinions of restaurants and recycling companies," said Cui, adding that the price would be changed from time to time according to the three associations' guidelines as well as the price of fossil oil.

Cui said about 70 to 80 metric tons of waste cooking oil is produced in Shanghai's estimated 35,000 restaurants every day.

Restaurants in Shanghai were ordered to install machines by the end of last year that separate oil and grease before the substances enter the city's sewage system, thus making it impossible to retrieve them.

According to Gu Zhenhua, deputy director of the city's food safety agency, more than 98 percent of Shanghai's restaurants have the machines.

"We've got it (the machine), but nobody has told us to use it so far," said Shirley Huang, a spokeswoman for Madison, a Western-style restaurant. Huang said restaurants in Shanghai are no longer allowed to find their own waste oil collectors. Instead, the government has entrusted the job to appointed collectors in different districts.

"That makes sense. We'd be worried if any company can come to us and collect the waste oil," she said.

A spokeswoman for another major restaurant chain in Shanghai said that if a restaurant occupies an entire building, it has to pay for its own oil and grease separation machine. Otherwise, it will be offered by the proprietor.

"The current policy is that the government requests us to provide proof of the machine. It doesn't matter whether the machine was bought by us or the landlord," said the spokeswoman, who did not want her restaurant to be named.

The local government will release data on how much waste oil restaurants give out so consumers can make informed decisions, Gu said.

The new system also supervises the waste oil's transportation process by installing electronic monitoring equipment and the recycling company's selection process by inviting public bidding.

"We've got two recycling companies on the list so far, but they'll be watched even though they're already on the list. It's possible that we will kick them out if anything goes wrong," said Cui, adding that the waste oil will be turned into biodiesel.

However, Fan Zhihong, associate professor of nutrition and food safety at the China Agricultural University, said she fears that there's no way to guarantee the profitability of recycling companies. As a result, the management chain may not be sustainable, Fan said.

"The government has only taken good care of the first part of the issue, which is how to collect the waste oil," Fan said. "But if the company can't sell the biodiesel, ... how can you ensure the whole chain will be sustainable?" Fan said.

According to the regulation, restaurants that don't offer the waste oil to the appointed collector, and collectors who fail to transfer the oil to regulated recycling companies could face fines of 20,000 to 50,000 yuan. The most serious offenders could face criminal charges and a fine of up to 100,000 yuan.

Contact the writer at shiyingying@chinadaily.com.cn