The Asian Development Bank (ADB) is helping the People’s Republic of China (PRC) improve the quality of wastewater management and reuse through a $240 million private sector loan package to Beijing Enterprises Water Group Limited (BEWG), an integrated water infrastructure operator. The loan agreement was signed today in Beijing.

The PRC is encountering water challenges due to rapid urbanization. More than 400 cities report water shortages, with an average daily shortfall of 16 million cubic meters, equivalent to the average annual consumption of about 160,000 people. Per capita freshwater resources are scarce and annual per capita water endowments have been declining at an alarming rate.

Extensive water pollution is further reducing the availability of freshwater. In 2012, 31% of 10 major river systems and 39% of 62 primary lakes could not fulfill the water quality requirement for drinking water. The public health consequences of that are significantly affecting lives, livelihoods, and productivity.

“Improving wastewater treatment quality is the effective response to the challenges that the PRC faces. With adequate technologies, wastewater can be treated to meet specific needs and purposes, such as industry use, including machine cooling, cleansing, and boiler operation. Higher quality freshwater can be freed up for end uses such as drinking and cooking,” said Hisaka Kimura, Principal Investment Specialist at ADB’s Private Sector Operations Department.

The loans will be used to treat an additional 600 million tons of wastewater annually by 2019 through upgrading wastewater treatment plants to meet the grade 1A standard, which means the water can be reused for industry cooling and watering city gardens, for example.

ADB’s support consists of a direct loan of $120 million equivalent in dollars and yuan for BEWG and its subsidiary BEWG Environmental Group Company Limited and a complementary loan of $120 million equivalent in dollars and yuan to be funded by commercial banks.

In addition, technical assistance of $500,000 jointly from the Climate Change Fund, established by ADB, and the Multi-Donor Trust Fund under the Water Financing Partnership Facility, funded by the governments of Australia, Austria, Norway, Spain, and Switzerland, will help to promote the reuse of wastewater in cities across the PRC.

Electricity accounts for over half of the direct cost of wastewater treatment. Reuse of wastewater can thus be made more cost competitive if appropriate energy efficiency measures are introduced. The technical assistance to support energy audits, energy management systems, knowledge sharing of energy-saving solutions, and policy recommendations will enhance the affordability of water reuse, freeing up fresh water in cities across