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.