The European Investment Bank is lending USD 26.5 million (EUR 22.7 million)(1) to Chengdu General des Eaux - Marubeni Waterworks (CGDEM) for a water treatment plant in Chengdu, China. CGDEM, is a joint-venture company between Compagnie Generale des Eaux Sahide (France), which belongs to the Vivendi Group, and Marubeni Corporation (Japan). Under the first foreign wholly owned pilot urban water supply BOT development in China, CGDEM is providing the engineering, procurement, construction and operation to increase potable water supply in Chengdu, the capital of Sichuan Province.
EIB's floating rate loan, with a 12-year final maturity including a 3-year grace period, is covered by a guarantee provided by a syndicate of banks, which includes Crédit Lyonnais, ANZ, KBC, Dresdner Bank, Barclays Bank and the Development Bank of Singapore. The project cost will be co-financed by the Asian Development Bank, which previously provided the technical assistance for project development, and by a group of commercial banks.
The treatment plant will increase potable water supply to domestic and industrial consumers. It will be located at 30 km northwest of Chengdu and will have a capacity of 460 000 m³/day, adding 40% to existing capacity. The plant will be the highest quality bulk-treated water source in the municipality, home to about 10 million people, of which 3.2 million live in the city centre. At present, the Chengdu Municipal Waterworks General Company that operates the distribution network serves only about 1.8 million people. The investment will help to ease growing conflicts over resources, to improve water management efficiency and to increase awareness for environment protection.
The loan is provided in the context of the European Union's co-operation policy with third countries that have concluded co-operation agreements. In Asia and Latin America (ALA), the EIB may lend up to ECU 900 million during 1997-99 to support private capital investment projects or, investment that results in environmental improvements or fosters regional integration.
The European Investment Bank (EIB), established in 1958 under the Treaty of Rome setting up the European Community, is the European Union's long-term financing institution. It supports capital investment projects that further European integration. While strengthening economically weak regions in the European Union is its main objective, the Bank also finances projects in support of other EU policies. In some 120 countries outside the Community the EIB is participating in the implementation of the EU's development and co-operation policy.In 1998, the EIB provided loans totalling some EUR 29.5 billion, of which EUR 4.4 billion for projects outside the EU. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. As the EIB works on a non-profit basis it can pass on to project promoters the excellent conditions it obtains on the markets. The EIB normally finances up to 50 percent of project cost; on average it provides one third of the funding and co-finances investments with other institutions.
(1) 1 Euro = 1.07420 USD.