MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide $200 million in dual-currency loans to the China Water Affairs Group Limited (CWA) to improve the delivery of treated water to households and businesses in fast-growing small- and medium-sized cities in the People's Republic of China (PRC).
The PRC's urban population has more than tripled in the past three decades and while 90% of urban households have access to piped water, many smaller cities are struggling to expand their water networks in step with rapid urbanization. The country's increasing demand for water is also highlighting widespread waste and the inefficiency - reflected in poor metering and leaky pipes.
CWA will set up subproject companies and use ADB's funds to acquire, upgrade, expand, and operate municipal water networks. The goal is provide up to two million cubic meters of treated water per day by 2015 to second- and third-tier urban centers where services currently fall short of needs.
"By providing a multi-project financing facility to CWA, we aim to support private sector participation in water distribution in smaller cities to increase access and also improve water efficiency," said Hisaka Kimura, Senior Investment Specialist in ADB's Private Sector Operations Department.
The PRC government has prioritized improvement of municipal water supply, including a focus on private sector participation, but around 90% of municipal distribution networks are still owned by local governments. Private developers can play a critical role in improving service quality and the financial viability of water supply but are often held back by financing constraints.
"This cooperation with ADB will accelerate our efforts to expand and improve water treatment and distribution services for the benefit of society and our shareholders," said Duan Chuan Liang, Chairman of CWA. "The project also reinforces our support for the country's 12th Five Year Plan, which emphasizes water efficiency improvements."
ADB's support will comprise a direct A-loan of $100 million, denominated in US dollars and renminbi. The renminbi portion will use funds raised via ADB's renminbi bond issued in Hong Kong in late 2010. In addition, ADB will arrange a $100 million B-loan, under which ADB acts as the lender of record for commercial banks.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members -- 48 from the region. In 2010, ADB approvals, including co-financing, totaled $17.51 billion. In addition, ADB's ongoing Trade Finance Program supported $2.8 billion in trade.
CWA is a pioneer in the privatization of the water supply industry in the PRC, and has a sound track record in improving municipal water network management. The company provides tap water treatment, distribution, wastewater treatment, and related valued-added services in over 20 cities, with a daily capacity of over four million tonnes. It is listed on the main board of the Hong Kong Stock Exchange.
For more information, please contact:
For Asian Development Bank:
Tel +63 2 632 6138
Mobile +63 920 938 6487
For China Water Affairs Group:
Tel +852 39686613