MIGA has issued guarantees totaling $2.32 million to Golden State Water Group Corporation for its equity investment and shareholder loan to the Zhenjiang Golden State Water Co. Ltd. The coverage, for a period of up to 15 years, is against the risk of expropriation.

The project involves the restructuring and expansion of an existing water supply project in Zhenjiang, Jiangsu province of China by Zhenjiang Golden State Water Co. Ltd. on a transfer-own-operate basis. The plant provides water supply of 25,000 cubic meters per day to residents and industries in the town of Jianbi. The improvements include building a new water reserve tank, upgrading the plant’s automation system, strengthening water quality examination techniques, and streamlining operational resources. The investor will also construct a new active carbon filtration pool (pre-treatment water tank) to improve water quality.

After restructuring and expansion, the water plant is expected to provide better service and higher quality water. It will also lay the groundwork for the company to construct phase two of the project, which will double the amount of water supplied.

China’s 11th five-year plan, for the period 2006-2010, estimates that the country needs more than $128.2 billion in investment in the areas of water supply, wastewater treatment, and solid waste treatment. One of the key themes of the World Bank Group’s Country Partnership Strategy for China is managing resource scarcity and environmental challenges. Within this theme, constructing water supply and wastewater treatment facilities is a World Bank Group priority in China.

MIGA’s guarantee support was particularly important for the investor to help mitigate the risks associated with sub-sovereign investment.