East China’s Jiangsu Province has issued the country’s first Environmental Infrastructure Loan with an initial financing intention of 50 billion yuan. Let’s take a close look.
Ecological environment infrastructure is of strong public welfare nature as it generally requires a long construction cycle and large investment, making market entities unwilling or unable to make investments and resulting in low participation of social capital, which hinders the healthy and orderly progress of ecological environment infrastructure construction.
In order to solve the limited access to financial investment and financial support, Jiangsu has creatively introduced a financial support policy for "environmental infrastructure loans". Jointly formulated by the Provincial Department of Ecology and Environment, the Provincial Department of Finance, and the China Development Bank, the financial support policy provides policy-oriented credit funds, financial subsidies, and some other means for project construction with low interest rates, long loan periods, and large amounts.
“We have signed a framework contract of 3.5 billion yuan with environmental infrastructure loans this time, and we will invest more of this fund in the treatment of some sewage infrastructure. Its interest rate is slightly lower than our own financing as a local state-owned enterprise, which encourages our company to develop projects more healthily,” said Shao Min, Party Secretary and Chairman of Yixing Municipal Public Environmental Protection Group Co., Ltd.
Compared with the previous environmental financing products, the environmental infrastructure loan financing is more focused, cost-effective, with higher quotas, and longer terms. With a maximum loan term of up to 30 years, its financing interest rate generally does not exceed 3%, which is much lower than the interest rate of ordinary commercial loans.
In the meantime, the provincial finance department provides interest subsidies of 0.5% of the annual actual loan amount for environmental infrastructure projects that have been successfully financed.
With a financing intention of 50 billion yuan signed for the first environmental infrastructure loan, financial institutions and provincial-level EOD projects have also granted a credit of 30 billion yuan, which will further help various market entities reduce their financing burden and stimulate vitality.
“The signing of cooperation intentions and a total financial credit limit of over 80 billion yuan is the largest amount in the field of ecological environment in Jiangsu, which shows the prospects of cooperation to all parties and provides a path to promote the implementation of the project,” said Qian Jiang, Member of the Party Group and Deputy Director of Jiangsu Provincial Department of Ecology and Environment.
