China Gas inks US$200mln loan facility with Asian Development Bank

The company to use proceeds to expand its city gas projects using China’s 2.46tin cubic meters natural gas reserves.

Leading PRC piped-gas operator China Gas Holdings Limited (“China Gas”) signed a long-term loan facility up to US$200,000,000 with Asian Development Bank (“ADB”). China Gas will utilize the proceeds to develop natural gas projects in middle and small cities in China where it does not have city gas concession rights, as well as build gas transmission and distribution pipeline networks and related gas ancillary facilities. It is the second long-term loan secured with ADB, having previously secured a US$150,000,000 financing facility in 2006, thus reflecting the ADB’s support for the Group in its effort to expand its clean city gas business, according to a China Gas report.

“The project will help provide a clean, reliable, and long-term energy source to people in emerging cities where current infrastructure is underdeveloped and demand is presently unmet,” said Ms. Hisaka Kimura, Senior Investment Specialist, ADB’s Private Sector Operations Department. “The PRC government has set a long-term target to increase usage of natural gas, a cleaner fuel from its current share of 4% to 10% by 2020. One million cubic meters of natural gas can replace 1,350 tons of coal consumption.”

The PRC has natural gas reserves estimated at around 2.46 trillion cubic meters and it has been building country-wide pipeline networks to boost consumption in more cities. However, “last mile” distribution infrastructure within mid- and small-scale urban centers remains insufficient, resulting restrictions in gas utilization in those cities. China Gas will make use of this long term loan facility provided by ADB to develop pipeline networks facilities, targeting to uplift natural gas consumption in the country.

Mr. Liu Ming Hui, Managing Director of China Gas, said, “Being a shareholder of China Gas, ADB has continuously supported us in various endeavors over the years, and that includes capital and corporate governance. It also offered valuable advice on enhancing environmental protection measures and ways to carry out our corporate social responsibility. Consequently, we will strive to protect the environment and contribute to society by promoting the development of clean energy in China.”

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2009, it approved a total of $16.1 billion in financing operations through loans, grants, guarantees, a trade finance facilitation program, equity investments, and technical assistance projects. ADB also mobilized cofinancing amounting to $3.2 billion.