CHINA: World Bank loan to improve air quality and wastewater management in Beijing

The World Bank loan is also partially supplemented by a US$25 million equivalent grant from the Global Environment Facility (GEF) (see related story).

Air pollution is possibly the most critical environmental issue facing Beijing’s 12 million people (see related story), with water pollution not far behind. China’s reliance on low-quality coal, the recent rapid population increase and the growth of motor vehicles in the city have taken their toll on Beijing’s environment.

The Beijing Municipal Government has therefore started a clean air programme to convert all small scattered coal boilers and burners within the urban area to cleaner fuel, require all passenger cars to meet strict emission standards and require the planting of vegetation to control dusts.

In addition, the Second Beijing Environment Project will alleviate air and water pollution in Beijing by helping to :

• convert scattered coal-fire boilers to natural gas boilers
• promote energy conservation heating systems
• provide wastewater collection and treatment to the entire Liangshi River basin, which covers over a quarter of the city
• strengthen environmental management in Beijing

“This project is designed to support one of the most significant programs of urban environmental improvement in the world,” said Principal Urban Economist, Songsu Choi, the project’s task manager. “Beijing’s new environmental improvement programme and the project will attempt a swift reversal of the environmental deterioration.”

If successful, the project and the other parallel actions would turn Beijing’s air and water quality from that barely acceptable for industrial zones to ones that comply with WHO guidelines.

The overall project cost of US$1255 million will be financed with US$343 million from the central and municipal governments. The IBRD loan of US$349 million is being made at the Bank’s standard interest rate for LIBOR-based US dollar single currency loans, with a maturity of 20 years, including a five year grace period. US$355.5 million will be provided by beneficiaries and the remaining US$182.5 will be financed through local commercial bank loans.