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dam-l FT "New doubts over Chinese plant" 10 Mar 2000

Financial Times
New doubts over Chinese plant
By James Kynge in Beijing - 10 Mar 2000 08:26GMT www.ft.com 
                                      
Demand for power from China's controversial $24.5bnThree Gorges hydro-power
project, the world's largest civil engineering undertaking, may fall
significantly short of supply, a former senior executive in the project has
claimed. 

Yuan Guolin, who until two months ago was the deputy general manager of the
China Yangtze River Three Gorges Project Development Corporation, said a review
was needed on whether the project could sell all its output after it began
generation in 2003. 

Environmentalists and human rights activists have already called the
project into
question, citing the potential disruption to the ecological balance of one of
China's most scenic and fertile areas. 

 They say a huge reservoir that would be created by a vast dam across the
 Yangtze would displace more than a million people, flood
vast areas of farmland and could cause extensive silting. 

Mr Yuan, a delegate to the Chinese People's Political
Consultative Conference in Beijing, said one potential problem was that
authorities
in the 10 provinces and municipalities supposed to be customers of the Three
Gorges project were planning their own power stations - which would provide a
ready source of tax revenue for the local authorities. 

A demand shortfall from 2003 would be especially damaging
to the project because revenue from post-2003 production was supposed to
finance the third phase construction of the project to last for 6 years from
2004. 

Such a development could hamper efforts to raise foreign
financing for the dam, putting pressure on the government to fund the US$5.5bn
Beijing had initially hoped would be financed by foreign lending and
international capital markets. 

Another large hydro-power station, the 17bn kw/h Ertan
station in south west China, is already unable to sell about 60 per cent of the
power it produces, an executive said. 

Li Dehou, vice-director of the Sichuan Economic and Trade
Commission, which oversees the project, said the plant was offering
discounts to industrial and residential users in an effort to sell more of
its output.


One problem with Ertan, which was built with a $1.8bn
project loan from the World Bank, is identical to the concerns described by Mr
Yuan on the future of the Three Gorges. 

Chongqing, the largest city in Sichuan but
administratively independent from the province, had agreed at Ertan's
inception to take 32 per
cent of the output but was now only taking about 14 per cent. 

Part of the reason for this was that Chongqing has its own
power stations which generate electricity more cheaply that Ertan and which
yeild tax revenue for the municipal authorities. 

Mr Li said that Ertan's best hope for the future was to
try to sell its output to China's eastern provinces, but he did not
elaborate on how
this would be done or on whether this would present another source of
competition with the Three Gorges.

_____________________________________________


Doris Shen
International Rivers Network 
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Berkeley, CA 94703
doris@irn.org   
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