Salcon secures 50-year China concession

Salcon Bhd secured a 50-year concession for the Changle County water supply project in China's Shandong province through its joint venture with Changle County General Water Supply Company (CCGWSC).

Salcon Bhd secured a 50-year concession for the Changle County water supply project in China's Shandong province through its joint venture with Changle County General Water Supply Company (CCGWSC). The concession marks the company's first project in China, for which it planned to make an initial investment of about US$ 10.5 million.

The joint-venture company, Shandong Salcon (Changle) Water Supply Company, which is 75% owned by Salcon's wholly-owned subsidiary Salcon Water (HK) Ltd and 25% held by CCGWSC, would manage the project, which is expected to begin before the end of this year. Salcon and CCGWSC signed the joint venture agreement on 29 July 2002.

The project involves taking over an existing water treatment plant with 20,000 m3/day and completing another 20,000 m3/day water treatment plant. The two plants will provide potable water to a total population of about 600,000, of which 100,000 are living in urban centres, consisting of 15 townships and an Economic Development Zone.

The major investment will be in the distribution of pipelines in the new Economic Development Zone in Changle County.

Salcon Chief Executive Officer Datuk Lim See Teok commented: "Unlike Salcon's previous projects which are mostly on build-operate-transfer basis, the concession in Changle County covers all aspects of potable water supply such as construction, operation, maintenance as well as downstream activities in the form of billings and collection."

According to Lim, the current investment of US$ 10.5 million is based on the group's current projection of the 40,000-m3/day capacity, which is expected to cater to demand within the next three to four years. Recent economic development in China has resulted in the growth of manufacturing and industrial activities in Changle County. Currently, water demand growth in Changle County is about 20% and is expected to increase 30% to 40% over the next three to four years.

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