The International Finance Corporation (IFC), a member of the World Bank Group, and a fund managed by the IFC Asset Management Company (AMC) on May 18 announced that they have invested US$150 million in China Tian Lun Gas Holdings to help expand the company’s natural-gas distribution infrastructure in China.
The equity investment is expected to substantially increase the supply of natural gas, a cleaner and more economical form of energy than traditional fuels such as coal, diesel and gasoline, particularly in less developed Chinese cities over the next three years.
The investment includes US$75 million from IFC’s own account and US$75 million from the IFC Global Infrastructure Fund (GIF), a US$1.2 billion fund that invests alongside IFC in infrastructure projects in developing countries and is managed by AMC. This marks the first deal in the region by the IFC Global Infrastructure Fund, one of AMC’s eight investment funds. On a combined investment basis, this is also IFC and AMC’s largest infrastructure equity investment in East Asia.
“IFC and the IFC Global Infrastructure Fund’s international expertise in infrastructure investments can help us achieve our goal of increasing access to clean energy for Chinese households and businesses,” said Yingcen Zhang, chairman of the Hong Kong-listed Tian Lun Gas. “We value our partnership with IFC and GIF whose investment will support our growth.”
This investment is the latest in a series of IFC investments in China’s gas sector to make the low-carbon fuel more available to millions of Chinese households and for industrial, commercial and transportation use in third- and fourth-tier Chinese cities. In April this year, IFC announced a US$300 million debt-financing package to China Gas Holdings; it also invested in ENN Energy Holdings in 2013.
"Tian Lun Gas will be the IFC Global Infrastructure Fund's first commitment in Asia,” said IFC Asset Management Company CEO Gavin Wilson. “We are excited by the opportunity to partner with a dynamic group as they participate in the rapid transformation of China's natural-gas sector."
Addressing air pollution is a key priority for China. Decades of fast economic growth, accompanied by heavy use of coal and oil for energy, has increased smog in cities. Natural gas, while also a fossil fuel, burns more cleanly and is less carbon intensive than coal, wood, heavy fuel oil, gasoline and diesel, making it a climate-smart energy choice.
“Natural gas is a sustainable, environmentally friendly, and economical fuel source with vast potential in China,” said IFC’s director for East Asia and the Pacific Vivek Pathak. “Our partnership with Tian Lun Gas reflects our support for the company’s business model and our commitment to helping China achieve greener growth.”
As of December 2014, Tian Lun Gas, which is headquartered in Zhengzhou, had 44 city gas concessions in China. It operates 36 natural-gas filling stations across 10 provinces, including Gansu, Guangdong and Yunnan.
