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BEIJING -- China's top environment watchdog has fined the Jilin Petrochemical Company, a subsidiary of PetroChina, the maximum 1 million yuan (125,000 U.S. dollars), for seriously polluting the Songhua River.

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An explosion at the company's chemical plant in northeast China's Jilin Province in November 2005 dumped about 100 tons of waste containing benzene into the nearby Songhua River.

The incident forced cities along the river, including Harbin, capital of northeastern Heilongjiang Province downstream, to cut water supplies to 3.8 million people for several days.

Under Chinese law, companies can only be fined a maximum of 1 million yuan (125,000 U.S. dollars) for causing pollution.

The State Environmental Protection Administration (SEPA) found the company guilty of contravening the Environmental Protection Law and two articles of the law on Prevention and Control of Water Pollution.

The incident triggered the resignation last year of China's former environmental chief Xie Zhenhua.

As well 10 executives of PetroChina have received demerits on their personal record, including Duan Wende, senior vice president PetroChina.

SEPA has rarely applied the heaviest penalty to companies that cause pollution, Thursday's China Youth Daily reported.

Experts argued that the fine was inappropriately low considering the losses caused by the incident.

Professor Wang Jin from the Peking University filed a lawsuit one month after the incident, demanding compensation of 10 billion yuan (1.25 billion U.S. dollars) from the company to restore the environment.

The case was not accepted by the court, but sparked discussions over who should foot the bill for cleaning up the environment. The government spent huge sums during the pollution crisis and on the clean-up.

It again highlighted an embarrassing situation for China's environmental protection departments which are constrained by the current legal and policy system, the newspaper said.

The Environmental Protection Law has not been changed since 1989. Many complain it is too "soft" with fines that are too low and local environmental watchdogs have few teeth.

Some companies find it is cheaper to pay a fine than it is to improve their pollution controls, the report said.

In addition, companies can be fined only once for a particular pollution incident in a certain period, prompting experts to call for a system under which companies can be fined for each day they violate pollution laws.