$100 Million Loan to Reduce Water Pollution in Wuhan, PRC

July 11, 2006

A $100 million loan from the Asian Development Bank (ADB) will help improve the urban environment, public health, and quality of life of residents and businesses in Wuhan City, People’s Republic of China (PRC), through better management of its water resources.

Wuhan, the capital of Hubei province, is home to almost eight million people and is a center of communications, education, culture, economy, trade, transportation and industry.

Rapid economic growth and urbanization over the last 25 years have resulted in inadequate urban infrastructure and placed pressure on overloaded facilities in Wuhan. As a result, despite abundant water resources, 56% of the rivers and 89% of the lakes in the city are polluted.

Wastewater discharge from the city, along with limited capacity to treat it, has led to this situation. The problem is compounded by overflowing sewers during the wet season. Moreover, flooding in the urban areas is often serious because of the aging and inadequately maintained drainage network and under-capacity pumping stations.

The project comprises nine activities covering municipal wastewater management, storm water management and development of utilities. It will construct new and upgrade existing wastewater treatment facilities, extend and rehabilitate collection networks and add larger-capacity storm water pumping stations.

“The project will provide the 10% additional capacity critical to achieving the city’s target of 80% treatment of the wastewater generated by 2010,” said Sangay Penjor, an ADB principal financial specialist.

As a result of the project, more than three million urban residents of Wuhan will benefit from reduced water pollution, protection from flooding, eliminated hazards from poor drainage and reduced incidence of waterborne diseases.

ADB’s loan will finance 38% of the project’s estimated total cost of $266.4 million. The loan comes from ADB’s ordinary capital resources and carries a 25-year term, including a grace period of five years. Interest rate will be based on ADB’s LIBOR-based lending facility.

The local government will shoulder 27% of the project’s cost, equivalent to about $72.3 million, while the balance will come from domestic commercial banks. The Wuhan municipal government is the executing agency for the project, which is due for completion in December 2010.

Source: Asian Development Bank