ADB Extends $200 Million to Boost Private Sector Involvement in China's Natural Gas Distribution Infrastructure

Strategic Insights -

The Asian Development Bank (ADB) has approved a loan for the second phase of the Municipal Natural Gas Infrastructure Development Project, which will enable China Gas Holdings Limited to expand its natural gas distribution coverage into smaller cities in central and western China. This move aligns with the Chinese government's goal of reducing coal consumption and increasing the use of natural gas, a cleaner fuel. The ADB's support will facilitate the expansion of gas infrastructure into emerging cities, providing a reliable and long-term energy source to underserved populations. Additionally, the project will involve technical assistance on energy efficiency enhancement measures and conversion from coal or diesel oil to natural gas to lower end-user energy costs.

Key Takeaways:

  • The ADB has approved a loan of up to $200 million to support the second phase of the Municipal Natural Gas Infrastructure Development Project in China.
  • The project aims to expand China Gas Holdings Limited's natural gas distribution coverage into smaller cities in central and western China.
  • The Chinese government has set a long-term target to increase natural gas usage from its current share of 4% to 10% by 2020.
  • The project will provide a clean, reliable, and long-term energy source to people in emerging cities where current infrastructure is underdeveloped and demand is presently unmet.
  • The 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.
  • China has natural gas reserves estimated at around 2.46 trillion cubic meters and has been building both international and domestic pipeline networks to improve access.
  • The "last mile" distribution infrastructure within smaller urban centers remains underdeveloped, resulting in gas shortages in some areas.
  • ADB will provide a grant of $592,000 from the Multi-Donor Clean Energy Fund to support technical assistance for the project.
  • The project aligns with the Chinese government's goal of reducing coal consumption and increasing the use of natural gas, a cleaner fuel.
  • China Gas Holdings Limited has emphasized its commitment to environmental protection and corporate social responsibility measures, with ADB supporting its development in areas such as finance and corporate governance.

Statistics:

  • The Chinese government aims to increase natural gas usage 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.
  • China has natural gas reserves estimated at around 2.46 trillion cubic meters.
  • The "last mile" distribution infrastructure within smaller urban centers accounts for a significant portion of gas shortages in China.
  • ADB has provided 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 Multi-Donor Clean Energy Fund, administered by ADB, has a grant of $592,000 to support technical assistance for the project.

Sources:

  • Asian Development Bank (ADB)
  • People's Republic of China (PRC) Government
  • China Gas Holdings Limited
  • Multi-Donor Clean Energy Fund