ADB to help PRC's smaller cities switch to natural gas, save energy

The Asian Development Bank (ADB) is extending up to $200 million to facilitate private sector participation in natural gas distribution infrastructure in the People’s Republic of China (PRC).

The project will support the Government of the PRC’s push to reduce coal consumption and increase the use of natural gas, a cleaner fuel that is better for the environment and in large supply in the PRC.

The ADB Board of Directors have approved a loan for the second phase of the Municipal Natural Gas Infrastructure Development Project, which will allow China Gas Holdings Limited, one of the leading private natural gas distribution companies, to expand coverage into smaller-sized cities in central and western PRC. It follows first phase assistance to the company for the rollout of gas infrastructure in larger regional hubs.

“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 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 both international and domestic pipeline networks to improve access. However, “last mile” distribution infrastructure within smaller urban centers remains underdeveloped, resulting in gas shortages in some areas.

ADB will also provide technical assistance on combining energy efficiency enhancement measures with conversion from coal or diesel oil to natural gas to lower long-term end-user energy costs. The technical assistance will involve a grant of $592,000 from the Multi-Donor Clean Energy Fund, administered by ADB. The Fund, which includes contributions from the governments of Australia, Norway, Spain and Sweden, is part of the Clean Energy Financing Partnership Facility.

“ADB is a shareholder of China Gas Holdings Limited, and over the years it has supported our development in such areas as finance and corporate governance, while enhancing our environmental protection and corporate social responsibility measures,” said Liu Minghui, Managing Director of China Gas. “We will maintain our focus on environmental protection and fulfill our corporate social responsibilities, and will continue to promote the reform and development of clean energy in the PRC.”

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