Chinese-French consortium wins USD 688m water PPP 

22 November 2018 - 12:00 am UTC

A consortium, comprised of China State Construction Engineering Corporation (CSCEC), France’s SUEZ Water and other Chinese firms, has won a key river water treatment PPP in central China.

The procuring authority – Wuhan Water Resources Bureau – selected the winning bidder to DBFOM the RMB 4.77bn (USD 688m) Phase II of Huangxiao River, Jichang River Integrated Water Treatment BOT, according to a statement by the Wuhan municipal government Wednesday (21 November). The JV will have to raise debt financing of about RMB 3.82bn in order to carry out the project.

The winning consortium is led by CSCEC Third Engineering Bureau. The other members include CSCEC’s PE unit China State Construction Fund Management; Wuhan Sanzhen Industry Holding, Kaifeng Yellow River Engineering Development, SUEZ Water, and Central and Southern China Municipal Engineering Design and Research Institute.

The tie-up between the state-owned developer and the French environment firm for the project follows a strategic partnership deal in July this year amongst Wuhan Sanzhen, Beijing OriginWater, SUEZ and CSCEC Third Engineering Bureau to invest in water projects across Wuhan and other regions along the Yangtze River.

The private investor is expected to carry out channel widening, pollution control, aquatic ecosystem restoration, water environment monitoring, and integrated flow control for the Huangxiao River and Jichang River.

Huangxiao River is located in the Jiang’an District that forms part of the urban core of Wuhan, the capital of central Hubei province. The river has a basin covering an area of 49 square kilometres and it serves a population of 520,000. Jichang River, mainly located in the Dongxihu District forming part of the city’s western suburbs, lies on the north bank of the Han River. The waterway flows through a number of densely-populated residential headquarters in the district.  

Both rivers have been considered as the most-polluted waterways in the city despite multiple campaigns launched by local authorities to fight against pollution over the years. The total lengths of the rivers to be covered by the project add up to 21.8km.  

The consortium is expected to enjoy an annual availability payment of RMB 483m as well as an annual operation and maintenance fee of RMB 245m from the municipal government.

The project will be carried out under a 17.5 year concession with a 15-year operation period. Construction will take two and a half years. Wuhan Bishui Group, a water services firm owned by the Wuhan Municipal Water Investment Company and Wuhan Airport Integrated Development Company, will be the government vehicle that will form the project JV with the private investor. The CSCEC consortium will hold a 95% stake in the JV.

The government is being advised by Hubei Zhongchu Construction Engineering Consulting.

 

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