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ADB To Finance Private Sector Water Supply Project in China

The Asian Development Bank (ADB) today approved two loans totaling US$48 million for a project to provide a reliable supply of water to nearly three million residents in the city of Chengdu, the capital of Sichuan province and the second largest city in southwestern part of the People's Republic of China (PRC). Chengdu is one of 108 cities classified by the Central Government as having serious water shortages.

The project will be the country's first pilot BOT (build, operate, and transfer) water supply project - a model project to encourage private sector participation in the water supply sector. It is the first private sector water supply BOT project in the PRC and the ADB's first private sector project in the water sector.

The borrower is Chengdu Générale des Eaux-Marubeni Waterworks Co. Ltd., a company sponsored by a consortium of Vivendi (formerly known as Compagnie Générale des Eaux) from France and Marubeni Corporation from Japan.

Under an 18-year concession, the project will construct and operate one of the most modern water supply plants in the PRC with a capacity of 400,000 cubic meters. The plant will be transferred to the Chengdu municipal government after 18 years. The project will include additional facilities such as water intake works and a 27-km transmission pipeline to the city. Commercial production of treated water is expected to begin in September 2001.

The ADB is providing a loan of US$26.5 million and arranging additional financing of up to $21.5 million from external commercial lenders under its complementary cofinancing scheme.

The total project cost is US$106.5 million. In addition to the ADB, financing for the project will be provided by the European Investment Bank for which the commercial risks are guaranteed by the external commercial lenders under the ADB's complementary cofinancing scheme.

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