IIn order to continue to support improving the air quality in the Greater Beijing-Tianjin-Hebei region (including the neighbouring Henan Province, Shandong Province, Shanxi Province, Liaoning Province and the Inner Mongolia Autonomous Region as well as Beijing, Tianjin and Hebei Province) of the People’s Republic of China (the “PRC”), the Asian Development Bank (the “ADB”) has approved a sovereign loan of USD300 million, which will be provided to Zhongyuan Yuzi Investment Holding Group Co., Ltd.* (中原豫資投資控股集團有限公司) for the implementation of the Henan Cleaner Fuel Switch Investment Program. The Henan Cleaner Fuel Switch Investment Program is the first infrastructure results-based loan program in the PRC that incentivises the delivery of core results of “Conversion to Gas in Rural Areas”. The program will greatly speed up the township coal-to-gas conversion and the installation of gas sources in Henan Province.
The program will be implemented by Yutian New Energy Limited (“Yutian New Energy”), which was jointly established by Zhongyuan Yuzi Investment Holding Group Co., Ltd. (a provincial government-owned company) and the Company and its related parties. Since its establishment in June 2018, Yutian New Energy has already provided approximately 900,000 township coal-to-gas residential users in Henan Province with gas connection services. Benefitting from the capital support provided by the ADB, the township coal-to-gas conversion project in Henan Province (with a size of RMB4.3 billion) will reach 1.2 million township coal-to-gas residential users in Henan Province by 2023. The ADB is planning to provide further capital support in the future, with which 4.5 million township coal-to-gas residential users in Henan Province will be reached by the project by 2030.
This loan of USD300 million provided by the ADB will give strong financial support to the implementation of township coal-to-gas conversion in Henan Province by Yutian New Energy. Meanwhile, Yutian New Energy has already received part of a RMB492 million loan provided by the China Development Bank, which will be utilised to pay the Company’s construction fees for township coal-to-gas conversion projects. Policy-related loans provided by large financial institutions will facilitate the implementation of township coal-to-gas conversion in Henan Province by Yutian New Energy, and help shorten the payback period of the Company’s investment in the township coal-to-gas conversion project in Henan Province and reduce the project’s finance costs.