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 Asia lags Europe in environmental, social and governance investing. In a departure from evaluating deals purely from a one-sided economic benefit standpoint, China Everbright Water Executive Chairman, who is also a former government official, Dr Wang Tianyi, is one of the first Asian business leaders to address the investment community about social responsibility in investing. Our acquisition of Dalian Dongda Water is a major one for the industry this year. There are 3 merits to the M&A.
Firstly, more than half of its plants are still discharging treated wastewater at standard 1B. We can increase the project return by upgrading the facilities to standard 1A.
Secondly, it has strong engineering expertise for wastewater treatment equipment.
Thirdly, most of Dongda's water tariff rates are relatively low compared to other cities. Even without any upgrade of facilities, we are expecting an upward revision of water tariff rates, and that will translate into revenue growth. We hope to get achieve an IRR of 8% to 9% for Dongda.
A well developed acquisition plan lies not so much in what great basement bargains we're striking, but whether the deal is win-win for both buyer and seller.
This acquisition was completed after negotiations that lasted for less than half a year, compared to over one year for Hankore. The negotiations were intensive, with both buyer and seller demonstrating shrewd business acumen. In my opinion, the transaction terms that were agreed upon are fair.
While waste to energy plants are similar to wastewater treatment in their BOT financing structure, there are few opportunities for M&A in this sector. On the other hand, only 70% to 80% of municipal wastewater is treated before discharge, and the government is looking to raise this to 90%. Therefore, we hope make more acquisitions of wastewater treatment plants.
 China Everbright wastewater treatment reservoir. NextInsight file photoAs we integrated Hankore's business assets this year, we were also able to ink the deal with Dongda. If we sustain our healthy cash levels and have management, we will be able to sustain our strong M&A momentum. This will enable us to achieve our targeted wastewater treatment capacity of 10 million tons a year in 3 to 5 years.
We will also continue to pursue BOT and TOT projects.
Our objective is not to pursue highly lucrative projects with returns of 20% to 30%, but to have an environmental protection business with a long term stability in project pipeline structured on fair economic terms and conditions.
As a state-owned enterprise, we need to balance fair economic return with public interest. We hope our shareholders be of the mindset that they are investing in a public infrastructure play that obtains revenue from taxpayer monies, and not view us as a multi-bagger like the commercial play Alibaba.
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