MIGA has issued guarantees totaling $24.96 million to Golden State Waste Management Corporation for its equity investment and shareholder loan to the Beijing Gaoantun Waste to Energy Co. Ltd. The coverage, for a period of up to 20 years, is against the risk of expropriation.
The project involves the restructuring and expansion of a solid waste treatment and power generation facility being constructed in Beijing’s Chaoyang District on a 50-year build-operate-transfer (BOT) basis. The facility will have the capacity to handle solid waste treatment of 1,600 tonnes day, and to generate 225 million kilowatt hours per year from the incinerator’s waste heat. With an estimated total investment of $106.5 million, the project is expected to become the largest waste incineration and power generation plant in China. The project will apply advanced international grate incinerator technology to treat municipal solid waste and, at the same time, utilize residual heat and steam to generate electrical power.
With rapid economic and urban development in China, solid waste treatment in large cities has become an increasingly important issue. The government’s current five-year plan estimates that the country needs more than $38 billion in investment in the area of solid waste treatment. To meet this vast need and to benefit from cutting-edge technology, the Chinese government is encouraging municipalities to attract public and private investment from both domestic and foreign investors
The establishment of environmentally sound solid waste treatment facilities is a high priority for the Beijing municipal government and the Chaoyang District government
By disposing of 1,600 tonnes of solid waste per day, the project will conserve Beijing’s limited landfill capacity and reduce the amount of land used for waste management purposes. If successful, the project will have a powerful demonstration effect locally and nationally
The project is also consistent with the World Bank Group’s Country Partnership Strategy for China, which identifies as a key theme the need to manage scarce resources and environmental challenges. This project will also advance the Bank’s private sector development strategy of promoting private participation in infrastructure
MIGA’s guarantee support was particularly important for the investor to help mitigate the risks associated with sub-sovereign investment.