ADB Promoting Environmental Cleanup of Polluted River Basin in Henan, PRC

News Release | 12 December 2005

MANILA, PHILIPPINES - ADB will help enhance the quality of life in urban areas around a highly polluted river basin in Henan, the People's Republic of China (PRC), through a $100 million loan for wastewater and water quality improvement.

The project will assist 15 cities in formulating a practical approach to providing urban environment infrastructure, and introduce the principles of integrated water resource management and pollution control. It will build facilities for wastewater collection and treatment and delivery of fresh water in 15 cities around the Hai River basin, and promote institutional and financial reforms and enhanced management.

The resulting cleaner water and improved wastewater services will benefit an urban population totaling 1.5 million residents. About 170,000 of these are categorized as living under the poverty line of CNY1,348 per capita per year.

"The project will reduce the exposure of urban communities to untreated water and its associated public health dangers," says In-Ho Keum, a Project Administration Unit Head in ADB's East and Central Asia Department. "A cleaner environment should boost the quality of life by drastically reducing the amount of waterborne disease and the high medical, household, and economic costs that come with it."

The Hai River basin, part of which lies in the northern part of Henan Province, is one of the three most polluted river systems in the PRC, severely affected both by domestic and industrial wastewater. The polluted surface water in turn contaminates shallow groundwater sources, on which a significant proportion of urban and rural residents depend for drinking water.

Such pollution adversely affects the local environment, has an impact on public health, and contributes to transboundary pollution disputes with the downstream provinces of Hebei and Shandong.

The provision of environmental infrastructure and services has failed to keep up with the region's rapidly growing economy. Despite water shortages, the rate of wastewater treatment and use is very low, and only 34% of urban wastewater in the area is being treated.

To help meet these challenges, the project will build facilities, such as sewers, pump stations and treatment centers, to increase collection and treatment or urban wastewater to more than 70%. The water supply work including distribution pipelines and water treatment plants, will reduce reliance on abstraction of groundwater from shallow wells and provide water supply of adequate quantity and quality to 98% of urban residents in the cities.

The project will address weaknesses in the implementing and operating agencies to help ensure the sustainability of the project.

As the project will be undertaken at mostly fourth tier government level, where the size of the possible subprojects is small and there is limited or no experience of foreign-financed infrastructure projects, it will provide to the municipal service providers consulting services and training with a focus on human resource development.

"This is the first project in the wastewater and water supply sector in the PRC to adopt a sector loan approach in its project design," adds Mr. Keum. "The project complements other ADB assistance to municipal and country governments and water service providers in formulating a practical approach to providing urban environmental services, integrated water resource management and pollution control. The project's success will benefit operations of similar projects in the PRC in the future."

The total project cost is about $200 million, half of which will be met by ADB financing. The other half will come from local bank cofinancing ($27.2 million) and central and local government funds ($72.8 million).

ADB's loan comes from its ordinary capital resources, with a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based loan facility.

The Henan provincial government is the executing agency for the project, which is due for completion around the end of 2010.