IFC Backs Chinese Firm Pioneering Private Sector Solution to Public Health Threat
November 10, 2007 — Medical waste poses a serious threat to the environment and public health in China. Responding to this urgent need, IFC will invest $12.5 million in China’s UE Envirotech Pte. Ltd., a pioneering private sector medical waste treatment company. IFC’s investment -- equity of $3.5 million and a loan of $9 million -- will help the company construct and operate new medical waste treatment plants throughout the country in partnership with municipal governments. By 2010, UE Envirotech will operate 32 medical waste treatment plants serving more than 120 million people.
UE Envirotech Pte. Ltd. was formed in 2004 to improve environmental standards in Asia and offers reliable and environmentally-safe medical waste treatment solutions to communities. The company’s actions are expected to have substantial public health benefits, including a reduction in the risk posed by air-transmitted diseases and improperly-handled medical waste.
Reforms to Mobilize Private Investment
China produces about 1,800 tons of medical waste a day, according to the State Environment Protection Administration (SEPA). Many Chinese medical waste facilities are not in compliance with national or international standards of pollution control and handling; nor is there an efficient sorting system of hospital waste in many parts of China, resulting in medical waste improperly treated or dumped untreated into landfills.
This has become a critical issue prompting provincial and local governments to undertake a series of reforms to mobilize public-private partnerships in a once state-owned sector.
Guy Ellena, IFC Director for Health and Education, said, “The project will help expand much-needed waste treatment services in a socially and environmentally responsible way and demonstrate IFC’s commitment to social sector development in China.”
“IFC is playing a strong developmental role in this investment by providing long-term debt and equity to a private firm that is carrying out an essential public good and, in so doing, helping to demonstrate the viability of private participation in this important sector,” Ellena added.
Partnering with Municipal Governments
Currently, UE Envirotech Pte. Ltd. has six up-and-running medical waste treatment plants in Anshan, Dandong, and Fuxin in Liaoning Province; Liaocheng in Shandong Province; and Xinxiang and Jiazuo in Henan Province. It also has contracts to construct and operate medical waste treatment plants signed with five other municipal governments in Chenzhou and Shaoyang in Hunan Province; Jiamusi in Hei Long Jiang Province; Jian in Jiangxi Province and Xianxi in Hunan Province. Together, the 11 facilities will service a population of more than 44 million people.
The company partners with municipal governments, usually in the form of a BOT (build-operate-transfer) arrangement by which it agrees to provide the entire waste treatment infrastructure and operating resources for a city and surrounding area. In return, the city grants the company the exclusive right to service and treat all the medical waste of hospitals in the municipality for the term of the contract. Currently, the company’s contracts cover the treatment of medical waste from public hospitals totaling more than 100,000 patient beds.
Ryan Sun, CEO, UE Envirotech Pte. Ltd. said, “IFC’s participation in the company is a strong endorsement of our management expertise, business strategy, and corporate governance. We are confident that this partnership with IFC will further enhance our contribution to the improvement of China’s environment.”
The company will be using the most advanced and environmentally-friendly technology in their facilities. It employs internationally recognized medical waste disinfection technologies which have been approved by SEPA and is adopted as part of the national standard with substantial environmental benefits and cost advantages.The company is also assisting national, regional, and local regulatory agencies in the development of new regulations governing waste handling, treatment, and disposal, and setting industry standards.
Richard Ranken, IFC Director for East Asia and the Pacific, added, “The project will have direct and immediate benefits for people living in the area, reducing their risk of disease and improving the environment. By bringing higher standards to regions that have not previously attracted this type of investment, it will demonstrate that medical waste can be treated in an environmentally appropriate and commercially sound manner.”
Health and Education Department, IFC