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Summaries of proposed guarantees are provided prior to Board consideration and final contract signing, and therefore are subject to change. Project briefs are disclosed after contract signing and do not reflect subsequent modifications (e.g., changes in guarantee amount).
 
Project Name Chongqing Water Project
Guarantee Holder Suez Environnement S.A.
Investor Country France
Host Country China
Sector Water and Wastewater
Gross Exposure ($million) 95.9
Fiscal Year 2009
Status Proposed
Project Number 7555
Environmental Category B
Date SPG Disclosed December 19, 2008
Project Board Date February 5, 2009
 

Project Description

This summary covers an investment by SUEZ ENVIRONNEMENT SA (“SUEZ ENVIRONNEMENT”) in the Chongqing Water Project in China. The investor has applied for a MIGA guarantee of € 69.3 million for a period of up to 15 years against the risks of transfer restriction and expropriation.

The project is located in Chongqing municipality, in southwest China, and involves the acquisition of the Chongqing Suyu Business Development Co. (“Suyu Co.”, a Chinese company. The project also includes the expansion of an existing wastewater treatment plant and installation of sludge dryers.  SUEZ ENVIRONNEMENT and NWS Holdings Limited (“NWS”) will each own 50% of the shares of Suyu Co., which will in turn own 15% of the Chongqing Water Group. The proposed MIGA guarantee would cover SUEZ ENVIRONNEMENT’s € 77 million equity investment (€ 70 million for the acquisition and € 7 million for the expansion and sludge dryers). Under the expansion, the capacity of the Tangjiatuo wastewater treatment plant will be increased from 300,000 cubic meters per day to 400,000 cubic meters per day and sludge dryers will be added to allow transportation and treatment of the sludge. The total cost of the expansion and sludge dryers is estimated at € 28 million.

Environmental Categorization

The project is a Category B under MIGA’s environmental review procedures. Click here to view the Environmental and Social Review Summary.

Development Impact

China’s western provinces have experienced rapid growth, but they continue to lag behind in attracting foreign direct investment. Chongqing municipality, in southwest China, has a population of about 32 million. The fast urban, population, and industrial growth in the region has resulted in serious wastewater issues. It is estimated that the municipality generates nearly 1 billion tons of wastewater a year.  Most of the untreated wastewater is discharged directly into the Yangtze and Jialing rivers, threatening the quality of water supply. The wastewater treatment represents a major environmental challenge for Chongqing, one of the largest cities in China, situated upstream of the Three Gorges dam on the Yangtze River.

The Chongqing municipal government has actively encouraged participation and involvement of foreign companies in the water sector to address these challenges. SUEZ ENVIRONNEMENT and NWS will bring in € 154 million of investment for the project. The involvement of foreign companies will also facilitate the introduction of advanced water and wastewater treatment technologies and management, including improvement of project management and corporate governance. This approach is fully consistent with the World Bank Group’s China Country Partnership Strategy (2006-2010) and the Chinese government’s western development strategy.

The project is also aligned with MIGA’s strategy of promoting investment in infrastructure projects.

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