Water and other urban infrastructure and services / Urban sewerage - Urban water supply

In the People's Republic of China (PRC), small and medium-sized enterprises (SMEs) play an important role in economic development, as they are key drivers of income and employment growth. On the other hand, SMEs are becoming major polluters, and are associated with severe environmental impact in some industrial areas. Industrial wastewater is difficult to treat due to high pollutant concentration, complex chemical composition, and high variance in water quantity and quality. Most SMEs do not have sufficient treatment capability and tend to dump untreated wastewater into waterways or sewers at volumes that often exceed the capacity of municipal wastewater treatment facilities. An additional challenge arises from sludge, which has serious impact on soil and groundwater quality.

The proposed project will support CT Environmental Group Limited (CTEG) to build, own, and operate a series of specialized SME industrial wastewater and sludge treatment plants in the designated areas determined by the local governments. CTEG's facilities will target SMEs in highly polluting industrial sectors, such as textile, paper, chemical, and food processing. Treated wastewater will be discharged according to national environmental standards or supplied to industry for reuse in manufacturing.

The project will contribute to mitigating water pollution from SMEs, and will improve SME industrial wastewater and sludge management through increased treatment of wastewater and sludge.

The project scope includes the installation and operation of SME industrial wastewater and sludge treatment plants at designed performance levels. By 2019, wastewater treatment capacity of 450,000 tons per day, sludge treatment capacity of 4,200 tons per day, and industrial water supply capacity of 240,000 tons per day will be developed. The facilities will comply with ADB safeguards and technical and financial eligibility criteria.

CTEG will be responsible for identifying, evaluating, selecting, negotiating, implementing, and administering the subprojects. Subprojects for ADB assistance will meet eligibility criteria agreed between CTEG and ADB.

By supporting inclusive growth and environmental sustainability, the project addresses two of the three development goals of ADB's country partnership strategy for the PRC. The project aligns with the country partnership strategy's sector focus on environmental protection, water management, and pollution control, and strongly complements ADBs current initiatives in wastewater treatment and water pollution control in urban areas, including advisory support.

The project aligns with ADB's water policy, which recognizes that remedies to water stress must include reversing the degradation of water resources caused by agricultural, industrial, and municipal effluents. ADBs Water Operational Plan, 2011 2020 also identifies wastewater management as a key operational focus in rapidly industrializing countries like the PRC. The project is an example of the type of intervention envisaged by the plan, which promotes water as a core investment area and raises ADBs water investment target to $2.0 billion$ 2.5 billion a year by 2020, and targets an additional $500 million per year for private sector lending. In addition, the project supports the Urban Operational Plan, 2012 2020, which identifies green cities as a priority theme of ADB operations.

The project is classified as category B for environment. The wastewater and sludge treatment services cater to various SMEs, particularly in textile industries. Dewatered sludge is transported to a brick-making facility, which is also operated by CTEG. The sites for CTEGs wastewater and sludge treatment plants are selected in coordination with respective local governments. Since 2003, the PRC has required wastewater and sludge treatment plants to conduct a full environmental assessment. The facilities are to be planned and operated in full compliance with PRCs laws and regulations. Potential adverse environmental impacts during operation include effluent quality, sludge management, noise, odor, and possible generation of toxic gases. Potential adverse impacts associated with construction and operation can be mitigated through the adoption of good engineering practices and an appropriate environmental management plan. Initial environmental examinations (including environmental management plans) will be prepared for ADB-funded subprojects in accordance with Appendix 1 of ADBs Safeguard Policy Statement (2009). CTEG's environmental and social management system (ESMS) will include environmental safeguards screening procedures to avoid subprojects with potential to be category A. The subprojects are contingent on local government plans for industrial development and pollution control; CTEG bids on and secures specific subprojects before preparing each environmental assessment, including the initial environmental examination requirement of ADBs Safeguard Policy Statement. The potential environmental and social impacts of the project have been identified and effective measures to avoid, minimize, mitigate, and compensate for the adverse impacts are in the environmental and social audit report, including the corrective action plan.

A corporate audit was conducted on CTEG, covering its past and current performance against the objectives, principles, and requirements of the Safeguard Policy Statement. In line with the findings of the audit and the corrective action plan, CTEG will establish an ESMS compliant with ADB's safeguard requirements before the first ADB disbursement, and will hire trained and capable staff to support the establishment and implementation of the ESMS.