Xiaolangdi success key to burden of funding

Crowning a year packed with highly symbolic events, the mainland next month diverts the waters of the Yellow River which flows through the heartland of this ancient civilisation.

The first and legendary Chinese emperor is credited with controlling the tempestuous waters of what was once known as China's sorrow and for today's leaders exercising mastery over the river is laden with symbolism.

The event will be overshadowed by the diversion of the longer Yangtze River to make way for the Three Gorges project, but for foreign contractors the ceremonies at Xiaolangdi are of possibly greater significance.

The dam is the largest project the World Bank has backed in the mainland or anywhere else, with US$1.1 billion in loans.

If it succeeds, Beijing and the World Bank may co-operate on other large dam projects. Many are on the drawing board, not just on the Yellow River but other rivers in western and southern China, including the Mekong.

On the strength of the Xiaolangdi experience, the World Bank already has approved another $400 million loan for a water diversion exercise, the Wanjiazhai project, to divert water from the Yellow River to the Fen River.

The Yellow River Commission has plans to complete 27 dams along the Yellow River by 2030.

The mainland hopes the rest of the world will help finance and build up to seven of these projects.

Xiaolangdi is not the first hydropower dam in the mainland the World Bank has helped finance but it is unusual in terms of its size, its cost and the engineering challenges.

Although the Chinese have built more dams than almost any other country apart from the former Soviet Union, the mainland authorities are hoping that the foreign consortiums building the dam will teach them a lot.

Mainland and foreign managers and technicians have learned from one another over the past few years of co-operation, according to Wang Xianru, director of the Yellow River Water and Hydropower Development Corp.

Altogether, 800 expatriate staff from 41 countries have been living at the dam site in a small, self-contained settlement.

Chinese engineers and construction companies have relished the opportunity to try to learn about modern management and construction methods, partly for domestic use and partly because the mainland wants to tender for international hydro projects outside the country.

Hundreds of staff have been trained, including 89 sent to study abroad.

As this is the largest foreign-financed project undertaken in the mainland, the Chinese have learned a lot about tendering and supervising bids according to international rules.

So far the Xiaolangdi experience has not been totally happy. Soon after construction began two years ago unforeseen problems with the building of discharge tunnels led to a serious rift between the Chinese and a key contractor, the German engineering firm Zublin.

Work was held up for nearly a year while the two sides attacked each other.

The Chinese accused the Germans of bringing in poor expatriate staff and sub-contracting work to cheap and unqualified Chinese labour as well as mishandling detonations to drive the tunnels.

The Germans denied the claims, but finally employed a new Chinese construction team and have managed to make up for lost time.

Italian company Impregilo has been able to complete the dam building ahead of schedule, and France's Dumez is supplying the turbines.

Sun Jinglin, deputy director of the Xiaolangdi project, said the overall record of foreign engineering firms in the mainland had been mixed, with Japan earning praise for its role in the Ertan hydro-electric scheme in Sichuan but criticised for its performance building Yunnan's Shuikou dam.

Unlike some of the six dams already built upstream of Xiaolangdi, this is being built not primarily to generate electricity but to act as a giant sieve to reduce the flow of silt through the lower reaches of the river.

After passing through Xiaolangdi, the river reaches the plains of middle China and deposits the mud at a rate of 10 centimetres a year.

After centuries the river bed is now higher than the surrounding region and the sudden flash floods which the occasional rainfall over the Loess plateau generates are dangerous.

When the Xiaolangdi dam is completed in 2001, it will cut down the silt build-up by trapping the mud behind the dam so it will be unnecessary to raise the levees downstream.

As a bonus, Xiaolangdi will provide 1,800 megawatts of electricity and help the development of industry in the largely poor and rural Henan province.

Some fear the dam might repeat the failure of the earlier Sanmenxia dam upstream.

This was the largest and most high-profile post-1949 dam project which was designed by Russian engineers.

Mao Zedong's impatience during the Great Leap Forward forced builders to speed up construction of the Sanmenxia peoject, which was finished by mainland engineers after the Soviet advisers left.

Soon after it was completed, the dam silted up so that it was both useless for generating electricity or for controlling the floods.

The question now worrying some observers is whether this time the engineers might have got it wrong again.

Some critics fear the silt might damage the turbines or that the reservoir will fill sooner than the 20 years envisaged.

Some of the dams built upstream have had problems with siltation including the Longyangxia and Liujiaxi.

Others are concerned about the worsening droughts in the upper reaches of the river and over-use of the Yellow River water.

In the past few years the river has been dry for months at a time and for distances as long as 1,000 kilometres.

Yet the exploitation of the Yellow River's potential for generating hydropower is essential for the long-term future of the western areas.

The river flows through some of the worst pockets of poverty in the mainland. Tens of millions struggle to make a living on the Loess plateau, the deserts of Ningxia and the Qinghai plateau.

The Beijing authorities cannot afford to ignore the demands of these interior provinces for calls on government infrastructure spending in view of the huge sums of foreign investment concentrated on the coast.

Domestic politics make it imperative for Beijing to direct some money into infrastructure projects in the hinterland, and dams often are the only possibility.

The best method of financing such projects is from international lending institutions which, in turn, means internationally competitive tendering.