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ADB Loan To Reduce Air Pollution In PRC Will Also Protect Monuments at Xi'an

Over four million residents of People's Republic of China's Shaanxi province and priceless cultural monuments at the province's ancient capital of Xi'an will benefit from a US$156 million loan approved today by the Asian Development Bank to reduce air pollution. Xi'an, home to the world-famous terracotta warriors, is the historic and cultural center of northwest PRC, with relics that record over 2000 years of history, including the Qin dynasty.

The three cities of Xi'an, Xianyang and Tongchuan form an industrial triangle in the center of a province which relies on coal to meet 85 percent of its energy needs and whose coal reserves are the third largest in the country.

The Xi'an-Xianyang-Tongchuan Environment Improvement Project will cut down air pollution, conserve energy, promote the use of cleaner fuel, strengthen environmental management agencies and continue moves towards market-based energy pricing.

Specifically, the project will replace old and inefficient boilers and domestic stoves with modern, efficient cogeneration plants and district heating systems, substitute natural gas for coal burning in Xianyang and Tongchuan, and reduce particulate emissions from a large cement plant in Tongchuan.

The ADB will also provide a technical assistance grant of US$935,000, financed from the Japan Special Fund, to strengthen the capability of the Shaanxi Provincial Planning Commission and the Shaanxi Environmental Protection Bureau to plan and implement environmental improvement programs.

Rapid industrialization and household coal-burning have caused a concentration of urban air pollution in the cities that frequently exceeds the limits for public health. Especially in winter, coal-burning is a primary cause of acid rain. The problem is compounded by the cities' location in a valley, which prevents the rapid dispersal of pollutants.

Shaanxi is an impoverished inland province that is richly endowed in cultural and natural resources. The project is part of a long-term strategy for environmental protection and sustainable regional development.

The total project cost is estimated at US$298 million. The ADB loan will come from the Bank's ordinary capital resources, with the interest rate determined in accordance with the ADB's variable lending rate system for US dollar loans. It is repayable over 20 years, including a 4-year grace period.

The executing agency for the project, which is due for completion by mid-2001, is the Shaanxi Provincial Government. The ADB has made seven loans totaling US$700 million for urban environmental improvement projects in the PRC.

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