ADB to help clean up China's third largest river basin

MANILA, Philippines, Dec. 22, 2008 -- A project to reduce pollution and improve clean water supply from the third largest river basin in the People's Republic of China (PRC), the Songhua River Basin (SRB), is getting support from the Asian Development Bank (ADB).

ADB is extending a loan of $200 million for the Songhua River Basin Water Pollution Control and Management Project, covering over half the total estimated project cost of $396.3 million. The remainder will be funded through water and wastewater tariffs, domestic loans from PRC banks, state-issued bonds, and equity capital from the local governments involved.

The project will improve the health and quality of life for about 9.4 million urban residents in the northeastern provinces of Heilongjiang and Jilin along the SRB by improving the supply of potable water, increasing wastewater treatment coverage, and enhancing solid waste management.

Songhua River is heavily contaminated with chemicals, heavy metals, and other pollutants, with untreated wastewater being discharged directly into the river and its tributaries, posing a serious threat to public health.

The project will build infrastructure and provide training to improve and expand water supply, wastewater treatment, and solid waste management. They will address looming water shortages by recycling wastewater, and reducing wastage. Ultimately, the project will help the PRC achieve the Millennium Development Goal of halving the number of people without access to safe drinking water and improved sanitation by 2015.

"The project will make a significant contribution to the control of water pollution in the SRB and will help solve current water shortage problems in project cities, while meeting the future demand for good quality treated water," said Sangay Penjor, Principal Evaluation Specialist in the Operations Evaluation Department, and former Principal Financial Analysis Specialist in ADB's East Asia Department.

It is also an integral part of a broader initiative of integrated water resource and river basin management focusing on improving the environmental condition in the SRB.

ADB is supporting public-private partnerships to help meet the large financing needs of wastewater treatment in the SRB. It will help fund the establishment of one treatment plant under the project, with Tsinghua Tongfang Water Engineering Company and the Qitaihe City government as partners.

ADB is also planning an equity injection in the engineering firm to allow it to pursue other such partnerships, providing a potential model that could be replicated around the country.

Tariffs will be set at levels that allow full cost recovery and a reasonable profit, but there will be measures to protect the poor, such as water bill discounts and cash rebates for households living below the poverty line.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members -- 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.

>> More information on the Songhua River Basin Water Pollution Control and Management Project