Shanghai, May 25, 2004
— The International Finance Corporation, the private sector arm of the World Bank Group, agreed to provide up to $35 million in financing to Xinao Gas Holdings and its subsidiaries. IFC will provide up to $25 million in debt financing to three Xinao Gas Holdings Limited subsidiaries operating in Shijiazhuang, Hebei province, Bengbu, Anhui province, and Xiangtan, Hunan province. IFC will also invest up to $10 million in Xinao’s equity.
Established in 1993, Xinao is one of China’s first private gas distribution companies. As part of the agreement, IFC plans to help Xinao develop a formal environmental and social management system to support its continued growth. IFC’s debt financing will be used to develop and expand Xinao’s gas distribution infrastructure in the three cities, including the construction and rehabilitation of gas processing plants, the installation of gas distribution pipelines, and the installation of supervisory control and data acquisition systems.
Francisco Tourreilles, IFC’s Infrastructure Department Director, said, “We are very pleased to be able to work with a leading private Chinese gas distribution company and contribute to China’s efforts to promote the use of natural gas and improve the environment. This project will have a significant development impact by helping reduce air pollution through the substitution of coal energy with natural gas, and improving access to a clean, low cost and reliable energy source.” Javed Hamid, IFC's Director for East Asia, added, “IFC’s investment will lend credibility to other local firms seeking international funding in the Chinese gas distribution market, as well as the broader infrastructure market.”
Mr. Wang Yusuo, Chairman and Managing Director of Xinao, commented, “This partnership with IFC, a member of the World Bank Group and one of the world’s most respected financial institutions, is a significant milestone in Xinao’s development. We look forward to working closely with IFC to develop Xinao’s existing and new projects and refine Xinao’s management and environmental systems to ensure future growth.”
Xinao currently operates gas distribution networks in 43 cities under exclusive operating licenses across 12 provinces/municipalities in eastern and northern China, covering a total connectable urban population of 19.6 million people. Xinao is also developing the natural gas transportation sector by converting vehicles from gasoline to compressed natural gas (CNG) power and servicing such vehicles through a growing network of CNG fueling stations.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
