New Development Bank approves loans for SA water sector and LNG Transportation Project in China

On 29 August 2024, the Board of Directors of the New Development Bank (NDB) concluded its 44th Meeting in Cape Town, South Africa, ahead of NDB’s Ninth Annual Meeting of the Board of Governors under the theme, “Investing in a Sustainable Future”.

Municipal Water Supply and Sanitation Programme in South Africa

The NDB Board of Directors approved a loan of up to US$1.0 billion to the Republic of South Africa for financing water and sanitation infrastructure development under the government’s Municipal Infrastructure Grant (MIG). The MIG is a conditional grant allocated to municipalities to reduce infrastructure backlogs and ensure the provision of basic services to poor households.

By focusing on providing access to water and sanitation services, the Municipal Water Supply and Sanitation Programme aligns with the National Water and Sanitation Master Plan 2030 of South Africa.

The programme will play a crucial role in addressing the pressing need for infrastructure improvements in the water and sanitation sector of South Africa, supporting MIG implementation.

The programme is aligned with the NDB’s General Strategy and the bank’s key areas of operation, which include financing water and sanitation infrastructure that facilitates universal access to clean drinking water and adequate sanitation, and promotes equitable and sustainable management of water resources.

The programme will contribute to achieving the United Nations Sustainable Development Goal (SDG) 6, which aims to ensure universal and equitable access to safe and affordable drinking water for all, as well as adequate and equitable sanitation and hygiene. Furthermore, it supports SDG 13: limiting and adapting to climate change by providing clean water supply and sanitation.

Loan to the Bank of Communications Financial Leasing for the LNG Transportation Project

The Board also approved a loan of US$150 million equivalent in RMB to China’s Bank of Communications Financial Leasing (BCFL) for the LNG Transportation Project. The loan will be used by BCFL to acquire at least three liquefied natural gas carriers, addressing the significant increase in demand for LNG in China and closing the gap between demand and supply of LNG carrier capacity.

BCFL, a leading financial leasing company in China, is fully owned by the Bank of Communications (BoCom). This transaction further cements the long-term strategic relationship between NDB and BoCom.

The NDB loan will help BCFL expand its green leasing portfolio. The imports of LNG will help reduce China’s coal consumption and related greenhouse gas emissions, which is in alignment with the 2030 Agenda for Sustainable Development issued by the Chinese government.

Meanwhile, this batch of LNG carriers will be equipped with advanced propulsion systems, representing a significant improvement in the shipping industry in terms of efficiency, economies of scale and environmental performance.

The project is primarily aligned with the UN’s Sustainable Development Goal 7, which aims to ensure access to affordable, reliable, sustainable and modern energy for all. By supporting the transportation of LNG to China, the project also contributes to the reduction of local pollutant emissions by replacing regional coal consumption, thereby aligning with SDG 13: Climate Action.

Other matters

The Board approved the revised Policy on Processing of Sovereign Loans and Loans with Sovereign Guarantee. These amendments will bring new efficiencies to the project approval cycle. The Board also reviewed the loan pricing for both sovereign and non-sovereign operations.

The Board received a comprehensive update on the NDB’s project pipeline for 2024–2025 as well as ongoing project implementation, with focuses on disbursement, procurement and social and environmental risks monitoring.

The Board discussed the Project Preparation Fund and its utilisation. The Board recommended that the Board of Governors approve the proposal on expanding the utilisation of the Project Preparation Fund.

The Board received an update on funding activities and took note of the analysis of the NDB’s treasury business. The Board also approved the club loan facility of up to US$1.5 billion.

The Board considered the Mid-Term Review Report on the NDB’s General Strategy for 2022–2026. The Board discussed membership expansion of the bank and provided guidance on the next steps.

The Board received a briefing on the conducted evaluations and discussed two corporate-level evaluations.

On 28 August 2024, the 32nd Meeting of the Audit, Risk and Compliance Committee and the 28th Meeting of the Budget, Human Resources and Compensation Committee were held in Cape Town.