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Jasper Becker

Fresh troubles have hit the World Bank's huge and problem-plagued scheme to create a national grain distribution network on the mainland.

 The US$980 million scheme which is running three years behind schedule has been further derailed by the cancellation of $100 million contract to build a bulk grain handling facility in Dalian.

 Last month, the World Bank upheld a complaint by Mitsubishi detailing irregularities in the way the tender was won by a British company.

 'The British company offered an excellent price but Mitsubishi decided to investigate. So last month the World Bank opened the bidding again,' a source said.

 Another source said: 'Mitsubishi did a computer search of companies and found evidence of some kind of technical malfeasance.'  The Dalian project is designed to handle millions of tonnes of export grain grown in Manchuria and ease the rail bottlenecks blocking the shipment of domestic grain to the south.

 The $270 million project to build bulk grain handling and storage facilities in Dalian has already been held up by a conflict between competing companies.

 The Dalian Port authorities planned to build the grain centre in the existing harbour but prolonged wrangling among the various domestic partners led to a decision to construct new facilities 24 kilometres down the coast.

 'They had to level a site and move villages to construct the new wharf,' a source said.

 The national grain distribution project, the biggest project the World Bank has ever attempted on the mainland, launched in 1993 was due to be completed this May but could take four or more years to complete.

 'It is grotesquely behind schedule,' admitted World Bank official Alan Piazza, blaming poor co-ordination and squabbles among various mainland bureaucracies.

 The biggest hold-up is in Jilin which has barely begun to build hundreds of grain silos and drying facilities and consequently hundreds of thousands of tonnes of grain reserves have been spoiled.

 In 1995, Zhu Rongji destroyed the incentive to complete the project by suddenly banning grain exports, thus preventing Jilin from profitably selling its corn to South Korea and Japan.

 In 1996, central government investigators arrested officials in Jilin accused of embezzling nearly five billion yuan (about HK$4.65 billion) set aside to buy and store grain.

 Another casualty of the dispute is the construction of another grain wharf in Liaoning at Yingkou, designed to help ship corn to the south. This has also been delayed indefinitely.

 And last year a separate World Bank scheme worth $300 million went awry when the Chinese partner, the China Agricultural Development Trust and Investment Corp, collapsed in a massive corruption scandal.

 Most projects have still to get off the ground.

 Analysts said the future of the grain distribution project scheme depends on whether Mr Zhu will make it a priority when he announces a fundamental overhaul of the national grain market this week.

 To create a functioning domestic market, Beijing needs to modernise its primitive system of storing and transporting grain around the country.

 Most grain is still packed and transported in bags and even when there are railcars, the railways linking the northeast with the south cannot cope with demand.

 World Bank officials believe the troubles of the projects make their participation in future projects unlikely, although Beijing must build many additional facilities to handle a vast increase in imports.

 The World Bank predicts imports might triple to 60 million tonnes a year in the next two decades, requiring investments of at least $2.4 billion in new port and rail transport facilities. Others foresee much larger needs.

 A US Government study said water shortages and loss of crop land could require imports of 90 to 155 million tonnes by 2025 while Lester Brown, president of the Worldwatch Institute, warns that 200 to 369 million tonnes might be needed by 2030.



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More delay for problem-struck US$980m China grain network