ADB's $200 Million Loans to Improve Clean Water Supply in Smaller PRC Cities

Aug 10, 2011

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.

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