The Asian Development Bank (ADB) said Friday it will provide 200 million U.S. dollars in dual- currency loans to the China Water Affairs Group Limited (CWA), in a bid to improve the delivery of treated water to households and businesses in fast-growing small- and medium-sized cities in China.
ADB's support will comprise a direct A-loan of 100 million U.S. dollars, denominated in U.S. dollars and renminbi, ADB said in a statement. 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 U.S. dollar B-loan, under which ADB acts as the lender of record for commercial banks.
"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," Hisaka Kimura, Senior Investment Specialist in ADB's Private Sector Operations Department, said in the statement.
China's urban population has more than tripled in the past three decades and while 90 percent 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, which are reflected in poor metering and leaky pipes.
The Chinese government has prioritized improvement of municipal water supply, including a focus on private sector participation, but around 90 percent of municipal distribution networks are still owned by local governments, the statement said, adding 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.
CWA will set up subproject companies and use ADB's funds to acquire, upgrade, expand, and operate municipal water networks, said the statement, noting the goal is to 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.
"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," the statement quoted CWA Chairman Duan Chuan Liang as saying, "The project also reinforces our support for the country's 12th Five Year Plan, which emphasizes water efficiency improvements."