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Miga has issued a guarantee to Compagnie Grale des Eaux of France, covering its US$40mn direct equity investment in Shenzhen Water (Group) Company in the People’s Republic of China. The coverage is for a period of up to 15 years against the risk of expropriation.

This project processes raw water abstracted by a state-owned company and treats sewage collected through the municipal wastewater collection network. The project supplies 90% of residential, commercial, and industrial customers in the Shenzhen special economic zone in Guangzhou province. The company currently supplies tap water but intends to start providing fully potable tap water by 2012.

Shenzhen Water services 2.5mn customers with five water treatment plants and four wastewater treatment plants. It has a daily water supply capacity of 1.9mn tons and a wastewater disposal capacity of 1.5mn tons.

The company currently treats 75% of its wastewater, the largest percentage and the first system of such a scale in any city in China and plans to expand its coverage in the coming years in line with the goals set by the Shenzhen municipality.

The project will help the Chinese government address water resource problems that are particularly acute in fast-growing urban areas. Miga’s involvement is vital to ensure private sector participation in the Shenzhen water sector, helping to reduce budget spending by the municipal government.

For customers, having fully potable water will eliminate the need to boil or buy drinkable water. The participation of Compagnie Grale des Eaux, which operates water projects around the world, is expected to have a demonstration effect on China’s water sector.