MANILA, PHILIPPINES - The Asian Development Bank (ADB) today signed an agreement to lend up to $200 million to China Everbright International Limited to develop waste-to-energy plants in secondary cities across the People's Republic of China (PRC). It will mark ADB's first private-sector municipal solid waste management project.

Effective disposal of municipal solid waste is a serious environmental challenge in the PRC. The PRC has become the world's largest producer of municipal solid waste, generating around 148 million tons per year and growing at 8-10% annually. Nearly half of such waste is untreated and dumped in unsuitable landfills meaning many urban poor, especially those living near the landfills, are exposed to severe air and water pollution, as well as to the threat of infectious diseases.

"Waste-to-energy processing with clean technology is the most effective method of treating municipal solid waste since it slashes waste volumes by 90% and eliminates methane gas emissions from the waste treatment process," said Hisaka Kimura, Investment Specialist in ADB's Private Sector Operations Department (PSOD). "Furthermore, waste-to-energy technologies substitute for fossil fuels by generating electricity and heat in the incineration process."

The PRC government has set a long-term target to increase the amount of municipal waste that is used in waste-to-energy generation from 1% in 2002 to 30% by 2030.

"To develop efficient waste-to-energy projects and achieve the target, municipal governments require fresh capital, advanced technology, and the management expertise of the private sector. This public-private partnership should serve as a model to spur more private investment in the industry in future," said Joe Yamagata, Deputy Director General in ADB's PSOD.

China Everbright International Ltd., listed in Hong Kong, China, is one of the leading environmental protection firms in the PRC and one of the first private-sector investors in waste-to-energy projects there. It will use the loan to develop and invest in plants using an advanced clean technology that, unlike most other waste-to-energy technologies, does not use coal supplements.

Philip Fan, the General Manager of China Everbright International, said, "With ADB's long-term financial support as well as its technical assistance in developing better environment and social management systems, our partnership will generate great value. Our hope is that by working together with ADB, China Everbright International will not only be able to contribute significantly to waste-to-energy development in the PRC but to its use in other ADB member countries as well."

The project financing is in the form of a direct $100 million A-loan and a complementary B-loan of up to $100 million, funded by commercial lenders with ADB acting as 'lender of record'. The loans will have a maturity of up to 10 years with a three-year grace period.

ADB will also provide a technical assistance grant of up to $653,000 from its Clean Energy Fund to evaluate the performance of the plants and communicate the lessons learned to municipal governments around the PRC and to other ADB developing member countries to encourage wider use of clean waste-to-energy technologies.

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