IFC to provide funding for China Gas Holdings

The International Finance Corporation (IFC), a member of the World Bank, has announced plans to provide funding for China Gas Holdings Limited, a leading natural gas distribution company in China.

China Gas is listed on the main board of The Hong Kong Stock Exchange Limited. It engages principally in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas and LPG to residential, commercial and industrial users, construction and operation of CNG and LNG gas refillingstations, and development and application of natural gas and LPG related technologies in China.

The proposed IFC investment in China Gas will help finance its FY2015 and FY2016 capital expenditure program, which includes the expansion of its gas distribution pipeline network to reach gas consumers mostly in 3rd-tier and 4th-tier cities and townships, the construction of over 400 CNG/LNG natural gas stations to provide natural gas to replace diesel and gasoline as a transport fuel for taxies, buses and long-haul trucks, as well as the maintenance of its existing city gas pipeline network.

The total project cost is estimated at about US$1 billion, of which the maximum amount will not exceed US$500million, will be financed by long term loans including US$143 million for IFC’s own account and a syndicated loan of US$250 million for the account of participants and US$107 million from IFC acting in its capacity as implementing entity for the Managed Co-Lending Portfolio Program. The remaining US$500 million will be financed by China Gas’ internal cash generation.

China Gas had 237 city gas concessions across 24 provinces in China as of March 31, 2014, a geographically diversified portfolio. China Gas also operates CNG and LNG refilling stations and LPG distribution businesses across China. In recent years, China Gas has expanded its gas distribution network into 3rd-tier and 4th-tier cities and townships in China to meet the energy demand in China’s urbanization process.

The current major shareholders of the company are Beijing Enterprises Group Company Limited, Mr. Liu Ming Hui and Fortune Oil PLC, and SK E&S Co. Limited.