ADB Signs Private Sector Deal to Support PRC’s Push for Green Urban Transport
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The Asian Development Bank (ADB) will help roll out environment-friendly buses and promote green public transport in the People's Republic of China (PRC) as part of a $400 million financing package for Minsheng Financial Leasing Co. Ltd. (MFL).
Faced with immense environmental challenges, the PRC is aggressively promoting green transport as a way to reduce greenhouse gas emissions in urban areas, said the Director of ADB's Private Sector Financial Institutions Division Ms. Christine Engstrom. ADB's support to MFL will help promote market solutions that will provide people with cleaner and more sustainable modes of public transportation.
Chinese leasing enterprises play an important role in promoting the development of the green economy in the PRC, said MFL President Ms. Wan Xiaofang. MFL will continue to support green businesses by providing environmental pollution control products to continuously improve energy efficiency in traditional industries, reduce environmental pollution, and develop environment-friendly products to expand the environmental protection industry.
The $200 million A loan agreement was signed today by Ms. Engstrom and Ms. Wan in Beijing. Senior staff from ADB and MFL also attended the signing ceremony.
The PRC has been promoting green transport to address congestion and air pollution by encouraging a shift from private to public transport, as well as the large-scale deployment of green vehicles. These actions will reduce emissions that contribute to global climate change. However, high capital costs and financing constraints have limited the expansion of green transport, particularly for green public transport.
ADB has been actively supporting leasing in the PRC to help overcome the constraints for investing in green public transport and has successfully implemented a $275 million clean bus leasing program in recent years.
ADB's financing for MFL will be used to finance the leasing or purchasing of green buses, including electric bus batteries. These buses should either be energy-efficient and new-energy buses (hybrid buses, battery-only electric buses, fuel-cell electric buses, and ultracapacitor buses) or buses running on cleaner fuels. At least a third of the A loan from ADB will be focused in the central and western regions of the PRC.
The financing package will also include a $200 million B loan�to be funded by commercial cofinanciers�to help MFL finance green vehicles, as well as batteries and charging stations for electric vehicles. Apart from ADB's assistance, the Global Environment Facility has provided technical assistance to strengthen the capacity of bus operators.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members�48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.
MFL, established in April 2008, is one of the five earliest financial leasing enterprises with a banking background approved by the China Banking Regulatory Commission. MFL has been ranked among the top level in the industry in terms of its profitability and business innovation. As of 31 December 2017, MFL's total assets was approximately RMB178,289 million, operating income was RMB3,518 million, and its net profit was RMB1,703 million.
Source: Asian Development Bank