Befesa CTA Qingdao, S.L. (China)

Sponsor: Befesa Agua, S.A.U.
Business: Desalination plant construction and operation
Industry: Water supply
Product: Equity capital
Total investment: 134.7 million euros
Resources: FIEX

China, which needs to supply water for domestic use for 20% of the world's population, has only 7% of the planet's hydric resources. Guaranteeing potable water for all its inhabitants is, therefore, a sizeable challenge. Over half of China's 661 cities are subject to periodic restrictions in supply, and in 100 water shortages are severe. According to the World Bank, pollution in one-third of Chinese rivers has reached such levels that the water is not even apt for industrial use. Consequently, while desalination is still an emerging market in China, there is every indication that it will acquire a very large scale in the years to come. This is an area of significance for Spain, the world leader in reverse osmosis desalination.

Against this backdrop of growth and expansion and the concomitant opportunities, BEFESA AGUA, the company that leads the Spanish desalination market, has undertaken a new investment project: the construction and 25-year operation of a seawater desalination plant at Qingdao, China, under DBOO (design, build, own and operate) arrangements. The plant, with a daily capacity of 100,000 m3, will supply drinking water.

The total investment amounts to around 134.73 million euros, 30% of which will be raised as equity and the remaining 70% as debt. COFIDES will have a final holding of 17% in the investee company, with a maximum commitment of 6.7 million euros, to be drawn from FIEX resources.

This is the first major seawater desalination project for human consumption in China and the first desalination plant in the world to be funded by local Chinese banks under a project finance scheme. Qingdao, the port in Shandong province where the desalination plant will be built, is one of the major cities on China's north coast. The project is strategically important for stimulating the Chinese economy overall and forms part of a Desalination Industry Plan backed by the Chinese National Development and Reform Committee.

BEFESA AGUA, an international technology firm specialising in water generation and management, develops, designs, builds and operates infrastructure for the entire water cycle. It is wholly owned by Befesa Medio Ambiente, the predominant company in Abengoa's environmental services business group. The company's 60 plus years of experience and ongoing investment in R&D+I have made it one of the world's largest companies in terms of installed or hired capacity, a privileged position from which to broach the water supply market. BEFESA AGUA is present in 16 countries. Its concessions and operation and maintenance contracts for large-scale desalination plants in Spain, Northern Africa, India and China together supply nearly eight million people with water.