Presentation: China Water PPP and Cases Sharing - Fifth Roundtable on Financing Water - Mr. Min Zhou

1. China Water PPP and
Cases Sharing
Min Zhou, CEO, Beijing Enterprises Water Group
Email：zm@bewg.net.cn；luoxuegeng@bewg.net.cn

2. 1994-2002
• Feature: Market reform, brought
in foreign investment
• Typical projects: BOT projects like
Chengdu No.6 WTP, Beijing No.
10 WTP, etc.
• Effect: Brought in the BOT model
and established market-oriented
pilots.
2002-2014 2014-till now
• Feature: Established a market-oriented
mechanism to meet the needs of
water supply and wastewater
treatment.
• Typical projects: Mianyang Taziba STP,
Beijing Daoxiang Lake STP, etc.
• Effect: Rapid development of private
sector, a large number of market-
oriented private enterprises emerged,
and the level of public services
increased significantly.
• Feature: Comprehensively improve
the ecological environment and
encourage social capital investment
• Typical projects: River basin
management project of Beijing
Xinfeng River, water environment
management project of Yuhang Tang
River Basin, etc.
• Effect: Significant improvement in
water quality; diversification of
investment and financing entities
Water Supply Water supply and waste water treatment
Water supply/waste water
treatment/water environment
Pilot
Phase
PPP Development in Chinese Water Sector
Advancement
Phase
Popularization
Phase

3.  The government has formulated
supporting policies and regulations,
to guarantee PPP development
 Effective tariff collection system
 Incorporate water and sewage tariff
into one bill
 Only qualified projects are
included in the national PPP
project library.
 Complete money evaluation,
financial affordability evaluation,
preliminary implementation plan
 Government budget guarantee
 Bottom line delineation
 Gradually pay attention to OM
 Pay-per-effect, construction cost
30% linked
 Establish National PPP Fund and Provincial
PPP Fund
 Encourage social capital to explore a
variety of financing channels, such as the
issuance of PPP project special bonds,
green bonds, ABS, REITs, etc.; BEWG has
issued 6.3 billion green bonds
PPP Practice in Chinese Water Sector
Policy and Regulation System User Pay
Government Monitoring Effect Oriented
Risk Management
Financing Support

4. TOP1
In sector 28
provinces
100+
cities
1047
plants
100million+
population
Kuala Lumpur Pantai 2
underground STP
(320,000 tons/day)
Singapore Changi 2nd NeWater Plant
(228,000tons/day)
As of 30 June,2019, BEWG owns and operates 1,047 plants,
including 875 sewage treatment plants, 140 water treatment
plants, 30 reclaimed water plants and 2 seawater desalination
plants, total design capacity over 37 million tones/day.
Adelaide Seawater Desalination Plant,
Australia
(320,000 tons/day)
Portugal
Malaysia Singapore
Australia New
Zealand
China Botswana
Angola
Business distributes
in 8 countries
BEWG Business Profile

5. Investment
Capability
 Strong investment capability
supported by diversified and
efficient financing channels.
 According to GWI
statistics(2016), BEWG ranked
TOP1 BOT developer in the
global private water sector.
EPC
Capability
Operation
Capability
 Provide best EPC solution
based on operation data and
experience of over thousand
plants owned by BEWG.
 Professional low cost
operation technology.
 Smart Water operation
platform supported by big
data.
“Global TOP40 Water
Companies”
No.3 by service population
——By GWI
Total assets, total revenue
and water treatment scale ranks
TOP1 in water sector in China
2010-2018
“Top Ten Influential Enterprises in
China's Water Industry”
TOP 1
China's TOP 500 in 2018
No. 401
——《Fortune》(Chinese
Version)
BEWG’s Three Major Capabilities and Sector Rankings

6. Total investment: CNY 2.3 billion
Project Scope:
Four sub-projects, including sewage treatment
plant(STP), river ecological recovering,
landscaping, park facilities construction, etc.
River rehabilitation PPP project of Tang River Basin,
Yuhang District, Hangzhou, Zhejiang Province, China
Before the project
-Tang River
After the project
-Tang River
BEWG CASE 01
Project Life Cycle:
STP sub-project: 2 years construction+28 years OM;
Water Environment sub-project:
2 years construction+13 years OM;
Project Mode: DBFOT
Before After

7. River rehabilitation PPP project of Tang River Basin,
Yuhang District, Hangzhou, Zhejiang Province, China
Differentiated charging mechanism
 STP charges: payment based on treated effluent
quantity
 Water environment charges: availability charge +
O&M service fee based on KPI evaluation
Project Feature
Integration of investment, operation and
construction
 Full project cycle, including: design, investment,
construction, operation and maintenance.
 Whole industry chain: traditional water + water
environment.
Smart Operation
Smart platform for River Chief, and smart
management system covering all stages of
investment, construction and operation.
High proportion Operational assets：above 40%
of CAPAX
Deal Structure
Consortium
Members
SPV
Financial
Institution
Pay-per-effect
according to PPP
agreement
Minority
Equity%: 1/3
Bank
loan%: 2/3
Tang River Basin PPP project,
Yuhang District
BEWG
（Leader）
Majority
Authorize
District
Government
Committee of
Future Technology &
City Management
Open
Tender
Consortium
Design/Investment/Cons
-truction/Operation
Repayment
of principal
and interest
BEWG CASE 01

8. Investment Amount：CNY 4.148 billion
Project Scope：
Sewage treatment, interception, black and odor water
treatment, river renovation, landscape improvement, sponge
city projects and smart water system, etc.
Project Life Cycle: 20 years, construction 2 years+ 18 years OM
Project Mode：DBFOT
工程实施前 工程实施后
Highlight:
So far the biggest complete PPP water comprehensive
environment treatment project in Beijing, which applied
river ecological restoration and cross-sectional water
quality standards as project performance evaluation
targets.
River rehabilitation PPP project of Xinfeng River Basin,
Daxing District, Beijing, China
Taiwan Street culvert exit
-Before the project
After the project
BEWG CASE 02

9. Controlled execution
Included in the PPP project library of the Ministry
of Finance, and strictly controlled the expenditure
overrun less than 10% of government budget.
Project Feature
Optimizing engineering and operational cost
Optimal solution: priority for natural condition
and landscapes to reduce engineering and O&M
cost;
Capex & Opex reduced：Wetland investment
reduced 24%, annual operation cost reduced 20%；
Deal Structure
Daxing
Government
Daxing Water
Bureau
BEWG
Daxing Materials
Group
Project SPV
Xinfeng River Basin
Manageemnt
Daxing Finance
Bureau
Town
governments
along the river
basin
AuthorizeAuthorize
Open
Tender
PPP contract signing
Performance appraisal,
supervision
Governm-
ent
Procure
service
Apply for service
fee according to
performance
Investment, design,
Construction, O&M
Majority Minority
River rehabilitation PPP project of Xinfeng River Basin,
Daxing District, Beijing, China
BEWG CASE 02

10. Project Profile
Planned capacity 260,000 tons/day,
phase one 80,000 m3/day, sewage
catchment area 67km2， service
population over 1 million, in BOT mode, c
30 years conssession operation.
Project Feature
 The first underground sewage treatment
plant under operation in northern China，
saved land for the Capital;
 A typical demonstration project that
implements ecological civilization
construction with conventional urban
sewage treatment plant. Harmony design of the plant with the environment,
interpret enterprise culture concept of "Water, Life, Love"
科研中试基地
BOT Project of Daoxiang Lake sewage treatment Plant, Beijing
BEWG CASE 03

11. PPP
ADBLoan
Government
guidance to the
market; Supporting
policies and
legislation
Establish an
effective tariff
collection
system;
Water and
sewage tariff in
one bill
EPC+2~3
years O&M
to ensure
effective
operation
Government
funding
+
Equity shared by
EPC contractor
+
Bank Loan
Suggestions on Development of Water Business
in Municipal Public Service

12. THANK YOU!