Rugao Water Treatment Plant

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In July 2004, Asia Environment Holdings (AEH) of Singapore was awarded a 25-year BOT contract by the city government of Rugao for a potable water treatment plant which was part of a larger project known as the Nantong City North-West District Water Supply Project. The plant was to provide 200,000 tonnes of water daily - enough for about 600,000 of Rugao's population of about one million people. AEH was also granted the right of first refusal to construct Phase II and III for an additional capacity of 400,000 tonnes per day. Like many of China's northern cities, Rugao was facing a serious water shortage after a prolonged drought. AEH, through its wholly owned subsidiary Nantong Water Holdings Private Limited (“Nantong Water”), took a 25% stake in the project company, Nantong Penyao Water Supply Co. Ltd. (Nantong Penyao), while the remainder was held by the state-owned Zhejiang Buoao Industrial Development Co. Ltd. (“Zhejiang Buoao”). The project reached financial close in September of 2005 following the completion of the land survey, drawing and plans. The project cost was estimated at US$48.1 million (RMB 398 million) and was funded through a combination of equity and loans. Of the total cost, US$35.9 million (RMB 298 million) was to be funded through loans from Chinese banks including the Jiangsu Branch of Industrial and Commercial Bank of China. The remaining US$12.2 million (RMB 100 million) was equity contributions from AEH and Zhejiang Buoao. AEH, through its Chinese subsidiaries, was also the main equipment supplier as well as the engineering design contractor for the project. The project was initially delayed because the company had failed to secure land use rights as a result of the Chinese government's tightening of the rules on the granting of such rights. The project was expected to be completed by 2007.