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dam-l WSJ: China's Improving Energy Supply Stokes Criticism of Three
Gorges
Sender: owner-irn-three-gorges@netvista.net
Precedence: bulk
May 12, 2000
China's Improving Energy Supply
Stokes Criticism of Three Gorges
The Wall Street Journal
by Karby Leggett
Staff Reporter of The Wall Street Journal
Shanghai, China- Underlying mounting
criticism of China's Three Gorges Dam is a fundamental shift in the
economics of the country's energy industry.
When China signed off on the massive project in 1992, it believed chronic
power shortages would fuel endless demand for the dam's electricity. The
logic appeared sound: Rapid growth was creating energy bottlenecks and
forcing up power prices- problems that were starting to hurt the economy.
In 1997, officials quietly decided to go one step further and flood the
dam's 350 mile-long reservoir as quickly as possible. That meant water
would rise to the upper limit in six years instead of the 10 originally
planned, maximizing output of electricity and speeding repayment of the $24
billion tab.
Now the decision is stirring a stom of protest and increasing scrutiny of a
project already tainted by reports of widespread corruption and
environmental damage. The latest opposition came two months ago, when 53
leading Chinese engineers and academics, including several participants in
the dam's original feasibility study, sent a protest letter to China's
leaders. Just made public, the petition said China should reconsider
rapidly flooding the reservoir because it could increase sediment buildup
and is forcing an additional 350,000 people to be relocated.
"We're not opposed to the project itself, but we do want to see that the
dam is built correctly and that damage is minimized," says Lu Qingkan, the
87-year-old author of the petition. Mr. Lu, a retired senior engineeer at
the Ministry of Water Conservancy, says he expects the government to
respond to the petition shortly.
One reason the protests carry such weight is that the chronic power shortages
initially expected haven't materialized. Lured by high returns, investors
have poured billions of dollars into China's energy market in the past 10
years, and the energy supply has gradually caught up with demand. More
recently, Beijing has introduced competitive bidding for some electricity
sales, a reform that promises to keep China's power prices under pressure
for years to come.
"The fundamentals have changed," says Bill Laukka, an analyst with ING
Barings in Hong Kong. "It will be difficult for the current returns on the
project to be as favorable as when the feasibility study was first completed."
For now, it is unlikely that Beijing will halt construction on the dam, or
even scale it back. Indeed in recent years Bejing has sold bonds to pay
for the work, including an international offering that was underwritten by
several large U.S. investment banks. Now China is considering listing the
dam's main construction company on the local sotck exchange to raise more
money.
Yet for all the official suport, the Three Gorges project remains mired in
more than just technical trouble. In January, China's top auditor
acknowledged that local officials had embezzled or wasted nearly $60
million in funds earmarked for construction and resettlement. Official
estimates say that about 1.3 million people must be relocated before the
dam is completed, though independent estimates are much higher.
-end-
--
Doris Shen
International Rivers Network
1847 Berkeley Way
Berkeley, CA 94703
doris@irn.org
tel: 510.848.1155 ext. 317
fax: 510.848.1008
IRN http://www.irn.org IRN China Page http://www.hk-sanxia.org
To learn how you can help stop financing of Three Gorges Dam
and other destructive projects by Wall Street investment banks
http://www.floodwallstreet.org