Sound Financial Backing Ensured for Three Gorges Project

The China Yangtze Three Gorges Project Development Corp (CTGPC) announced it had a strong financial backing for the world's largest hydropower project underway at the Three Gorges in central China's Hubei Province.

The leader of the project said the hydropower project has received 29.8 billion yuan (about US$3.6 billion) in government funding, since it officially started in 1993.

The Three Gorges project has two interest-free financial sources that consist of profits from the operational Gezhouba Power Plant and levies from increased national hydroelectric prices.

The Chinese government also amassed 61.7 billion yuan from the capital market for the gigantic hydropower project, of which some 31.9 billion yuan was secured in the form of bank loans, bonds and export credit.

So far, the project's rate of debts has been controlled to 51 percent. Such a low rate of debt burden is rarely seen for large infrastructure construction projects in China.

Li Yongan, deputy manager of CTGPC, said the regular cash surplus of the strictly controlled construction investment is an important indicator of the project's sound financial condition.

The balance has been attributed to the country's low-level interest rate. China adjusted downwards the interest rate several times in the past few years, which has helped lessen the cost of the construction of the hydropower project.

Based on China's loan interest rate in 1993, the cost of interest on the Three Gorges project loans would accumulate to 38.9 billion yuan upon its full completion.

The company's balance account for the first phase of construction (1993-1997) for the dam showed that the investment was saved by 8 percent during the period. The second phase of the project has already succeeded an averaged 3 percent of the annual investment surplus, since 1998.

Executives with CTGPC expected the project's government funding to be controlled under the state's approved budget of 50.09 billion yuan.

Li said the Three Gorges project can be called an economical hydropower construction program, compared to other projects of similar scale in the world.

However, the cost of the Three Gorges Power Station, installed with a combined generating capacity of 18.2 million kilowatts, is expected to be around 21.7 billion dollars.

Meanwhile, the project is ensured to have one of the world's advanced water conservancy functions to prevent flooding, navigation and environmental protection.






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