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                                                                                LONG-TERM PARTNERSHIPS WITH EMERGING PLAYERS




                                           Xinao Group – Investing in China’s Clean
                                           Energy Future

   The Xinao Group, a leading private energy concern in China, utilizes a new production process that converts coal into dimethyl
   ether (DME), a clean liquid fuel. The fuel can be used in households to replace coal or replace diesel and liquid petroleum gas as
   a fuel for many uses such as transportation and power generation.

   Xinao was new to the DME sector and sought IFC’s advice and funding as it began work on its greenfield project. IFC responded
   by giving Xinao access to in-house technical expertise and a full debt package.



                                                                             “We have benefited enormously from IFC’s expertise in the
                                                                              petrochemical sector and have incorporated many of their
                                                                              recommendations into the project concept and configuration.
                                                                              With this project, Xinao is developing a clean energy source
                                                                              that has been identified by the Chinese government as a
                                                                              strategically important alternative to polluting fuel such as coal
                                                                              or diesel.”

                                                                              -Mr. Wang Yusuo, Xinao’s Chairman



   Financing
   IFC provided Xinao Group with a full debt package that included an equity investment of $10 million, a $40 million loan from
   IFC’s account and a $128 million syndicated loan. This was IFC’s second investment with Xinao. Previously, IFC had provided a
   US$25 million loan and $10 million in equity to help Xinao expand its gas distribution network in China.

   Commercial and Technical Expertise
   Xinao relied heavily on IFC’s expertise to confirm the technical and commercial viability of the greenfield project and incorporated
   IFC’s advice on how to configure the plant’s gasification process. In addition, IFC facilitated a relationship between Xinao and
   researchers at Princeton University who have helped the company greatly improve the energy efficiency of its DME facility.

   Environmental Expertise
   IFC’s environmental experts and engineers worked with Xinao to implement carbon reducing technologies and plant design so
   that the environmental benefits of the project could be increased even further.

   Benefiting the long term health of China’s environment and people
   Currently, a large percentage of people in China are exposed to harmful emissions and every year an estimated one million
   Chinese die from air pollution, 60% of those from indoor smog. DME helps to improve indoor air quality by burning cleaner and
   more efficiently than traditional coal used for cooking and heating. Xinao’s project is making DME available and affordable in
   rural areas and small towns by using coal from the region and optimizing transportation costs.




                                           For more information about IFC’s chemicals industry sector, please contact:
                                                 Anil Chandramani, 1-202-473-4081 or achandramani@ifc.org
                                                       Kremena Tenev, 1-202-458-5466 or ktenev@ifc.org




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managed commercial forests
ifc.org                                                               2010