China Everbright Water Limited, an environmental protection company focusing on integrated environmental water services, has announced that it has won the tender for the PPP project for the construction of the "sponge city" of Zhenjiang. The company entered into a PPP agreement with the Housing and Urban-Rural Development Bureau of Zhenjiang City and a joint venture agreement with Zhenjiang Waterworks Corporation (ZWC), which is an indirect wholly-owned subsidiary of the State-owned Assets Supervision and Administration Commission of the Zhenjiang People's Government.

The Zhenjiang Sponge City Project is one of 16 "sponge city" pilot projects which will receive financial support from the central government of the PRC, as jointly announced by the Ministry of Finance, the Ministry of Housing and Urban-Rural Development and the Ministry of Water Resources of the PRC. It is also one of the PPP demonstration projects of the Ministry of Finance of the PRC. 

Pursuant to the joint venture agreement, Everbright Water and ZWC will establish a joint venture company, in which Everbright will hold a 70% equity stake with the remaining 30% equity stake to be held by ZWC. The Project company will undertake the construction, renovation and operation of a 22 km² land area and 11.5 km² water area in Zhenjiang. The total investment amount for the Zhenjiang Sponge City Project is estimated to be approximately US$400 million, which comprises a US$180 million subsidy from the PRC central government and a US$214 million investment to be contributed by the project company. The concession period granted to the project company is 23 years. 

The Zhenjiang Sponge City Project includes:

• The ecological restoration, repair, low impact development and renovation of pipeline networks, flooding and waterlogged areas within the Project Area, which is to be funded by the Government Subsidy.
• The construction and operation of the Zhengrunzhou wastewater treatment plant, including:
  • A waste water treatment expansion project with a daily designed capacity of 75,000 m³ which complies with the National Grade 1B water discharge standard.
  • An advanced waste water treatment facility with a daily designed capacity of 200,000 m³ which complies with the National Grade 1A water discharge standard.
• A series of rainwater pump stations, drainage networks, rainwater storage tanks and the ecological restoration and repair of certain rivers, which is to be funded by the Project Investment.

The project company will be responsible for providing engineering management services in relation to the Government Funded Portion and for the construction and operation of the project company Funded Portion.

Mr. Wang Tianyi, Executive Director & Chairman of Everbright Water, said: 

 "The concept for construction of a "sponge city" project is to build a city like a "sponge" with the function of storing water and "breathing" in order to effectively reduce the diffused pollution and to enhance the ability of preventing floods. Zhenjiang is a national model city of environmental protection with developed economy as well a favorable investment and commercial environment. The waste-to-energy project and photovoltaic energy project invested by China Everbright International Limited in Zhenjiang has been strongly supported by the local government in respect of project construction and operation management. By winning the Project, Everbright Water will devote to improving the progress of ecological restoration and clean water source with the support of the local government. With the joint effort of our management team, we believe that the Company will take the lead to making Zhenjiang Sponge City Project as a demonstration project of national sponge city with good investment return." 

"Only those enterprises that are equipped with the superiority in financing, engineering and operational capabilities as well as the ability to integrate these resources would stand a chance to win the bid for PPP projects as high requirements are imposed on environmental protection players - they will be evaluated in various aspects such as technology, funding, management and resources integration. The successful bid for the Project demonstrates that the Company's overall strength and technical capabilities are highly recognized by the local government. This will further strengthen synergies between our projects in Jiangsu Province and improve the strategic layout of our business. Winning the bid for the Project is of great significance to the Company's development in expanding into the sponge city construction market and building the Everbright Water's sponge city industrial chain."