MANILA - ?The Asian Development Bank (ADB) is extending a loan worth $200 million to China to develop the country's ?natural gas distribution infrastructure and promote renewable energy use.

The ADB said in a statement issued on Wednesday that the loan, which will be coursed through the second phase of the Municipal Natural Gas Infrastructure Development Project, will support the Chinese government's thrust to reduce coal consumption and increase the use of cleaner energy sources like natural gas.

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China Gas Holdings Limited, one of the leading private natural gas distribution companies, will use the loan to expand coverage into smaller-sized cities in central and western China.

"The project will help provide a clean, reliable, and long-term energy source to people in emerging cities where current infrastructure is underdeveloped and demand is presently unmet," said Hisaka Kimura, Senior Investment Specialist, ADB's Private Sector Operations Department.

Kimura said the Chinese government has set a long-term target to increase usage of natural gas from 4 percent to 10 percent by 2020. One million cubic meters of natural gas can replace 1,350 tons of coal consumption.

ADB will also provide a grant worth $592,000 for technical assistance. It will be coursed through Multi-Donor Clean Energy Fund. The Fund, administered by ADB, includes contributions from the governments of Australia, Norway, Spain and Sweden and is part of the Clean Energy Financing Partnership Facility.