fbpx 44905-014: MUNICIPAL NATURAL GAS INFRASTRUCTURE DEVELOPMENT PROJECT (PHASE 2) | Asian Development Bank

China, People's Republic of: MUNICIPAL NATURAL GAS INFRASTRUCTURE DEVELOPMENT PROJECT (PHASE 2)

Nonsovereign (Private) Project | 44905-014 Status: Active

The Project is the second phase of ADB's intervention to address the financial constraints on developing natural gas transportation infrastructure, which is the key obstacle to natural gas market development in the PRC. The project extends natural gas networks into satellite cities on the outskirts of cities where CGH currently operates natural gas distribution services with the assistance of ADB under phase 1. The project supports CGH in building a series of natural gas pipelines to connect household, commercial, and industrial end users in central and western regions of the PRC. ADB's loan is channeled directly to CGH and/or to joint ventures through ZIL, a wholly owned subsidiary of CGH.

Project Details

Project Officer
Hoshi, Hayato Private Sector Operations Department Request for information
Country
  • China, People's Republic of
Sector
  • Energy
 
Project Name MUNICIPAL NATURAL GAS INFRASTRUCTURE DEVELOPMENT PROJECT (PHASE 2)
Project Number 44905-014
Borrower/Company ZHONGRAN INVESTMENT LIMITED P2
Country China, People's Republic of
Location
Type or Modality of Assistance
2693-001 Loan Ordinary capital resources USD 10.00 million Committed
2693-002 Loan Ordinary capital resources CNY 567.08 million Committed
55 B-Loan Complementary Loan USD 100.00 million Closed
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Energy / Energy utility services

Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Hoshi, Hayato
Project Sponsor(s) CHINA GAS GROUP LTD.
Description The Project is the second phase of ADB's intervention to address the financial constraints on developing natural gas transportation infrastructure, which is the key obstacle to natural gas market development in the PRC. The project extends natural gas networks into satellite cities on the outskirts of cities where CGH currently operates natural gas distribution services with the assistance of ADB under phase 1. The project supports CGH in building a series of natural gas pipelines to connect household, commercial, and industrial end users in central and western regions of the PRC. ADB's loan is channeled directly to CGH and/or to joint ventures through ZIL, a wholly owned subsidiary of CGH.
Objectives and Scope The project's development impact is threefold: it will (i) contribute to the PRC's efforts to promote the use of natural gas to enhance energy diversification and address environmental degradation; (ii) contribute significantly to the reduction of air pollution by substituting natural gas for coal, oil and coal gas and thereby reduce particulates and sulfur dioxide from industries and households, most significantly benefiting urban populations, in particular the urban poor, who suffer severely from indoor and outdoor air pollution; and (iii) support the government's strategy of encouraging private sector participation in the municipal environmental infrastructure. The project's outcome will reflect a continuation of ADB's efforts to provide residential, industrial, and commercial consumers with a clean, reliable, and long-term energy source in a financially and environmentally sustainable manner.
Status of Development Objectives

The project has been able to meet some of its development targets to date, including achieving sales volumes targets and new industrial/household/commercial users connections and reduction in greenhouse gas emissions.

CGH's natural gas system is now located in 542 gas projects throughout PRC and has produced 24.6 billion cu meters of gas sales in FY2019 (ending March).

Status of Operation/Construction

CGH is primarily engaged in the construction and operation of city gas pipelines, and transmission of natural gas and sale of liquefied petroleum gas (LPG) to residential, industrial and commercial users in the PRC. CGH constructs and operates arterial and branch pipeline networks and connects natural gas pipelines to its end-users (classified as residential, industrial and commercial). CGH earns connection fees and gas usage fees from its customers.

In FY2018, CGH has acquired 20 city concessions in 9 provinces and autonomous regions, increasing city concessions to 495. CGH and owns 8 LPG terminals, 300,000 m3 of LPG storage capacity, 100 LPG distribution projects and 1,100 retail stores covering 19 provinces in PRC. CGH also produces and sells complementary non-core products/services such as gas appliances, gas insurance, water and air purifiers and gas alarm systems, via its existing network covering more than 30 million customers.

Linkage to Country/Regional Strategy The Project supports the government's strategy of encouraging private sector participation in the municipal natural gas sector, given the substantial capital required in expanding pipeline networks and the limited self-financing capacity of the municipalities. It fully aligns with ADB's Strategy 2020 (long-term strategic framework), its current country partnership strategy for the PRC, its Energy Policy, and initiatives combating climate change, and complement ongoing ADB public sector operations in urban environmental improvement.
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects : The project is rated Category B for Environment, Category B for involuntary resettlement and Category C for indigenous peoples. In accordance with the project's Environmental and Social Management System (ESMS), an Annual Environmental and Social Performance Report (AESPR) has been regularly prepared by CGH providing an update on the company's compliance with environmental and social safeguard policies, including issues related to gender and development and core labor standards
Involuntary Resettlement Limited Impact since the land requirements for gas infrastructure are minor the resettlement impacts are likely to be limited.
Indigenous Peoples No Impacts. No adverse impacts are envisaged on ethnic minorities.
Stakeholder Communication, Participation, and Consultation CGH operates in a collaborative and consultative manner with all the key stakeholders, including the communities in which CGH and its subsidiaries operate, its staff, local government, and consumers. Its Information Department engages stakeholders through various media and information dissemination initiatives. For future activities of CGH, its environmental and social management system will apply, specifically the work processes and procedures or guidelines that include environmental and social assessment, public consultation and disclosure, and monitoring and reporting.
Timetable for assistance design, processing and implementation
Concept Clearance 05 Feb 2010
Credit Committee Meeting 20 Sep 2010
Approval 09 Nov 2010
PDS Creation Date 01 Feb 2011
Last PDS Update 14 Nov 2019

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

None currently available.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.