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Mark O'Neill

The company building the Three Gorges hydro-electric dam on the Yangtze River will list in Hong Kong and overseas after a domestic listing next year, according to official media.

China Yangtze Three Gorges Project Development, which faces a severe funding shortage, was being restructured and some of its assets would be put in a new unit, Sanxia Power, to be formed in June, the 21st Century Business Herald  reported yesterday.

Three Gorges Project vice-president Li Yongan  said the company would issue A shares next year and in future list in Hong Kong and abroad.

The dam, near Chongqing, is the largest water engineering project in the world.

More than one million people and 1,000 companies are being moved from the area of the reservoir the dam will create. Work began in 1993 and is due for completion in 2009.

The latest estimate for the total cost is 204 billion yuan (about HK$191.1 billion).

About 76.2 billion yuan had been provided by the end of last year, of which 46 per cent was the company's own capital and the rest was debt.

This year, the project will need 17 billion yuan, including the cost of relocating 143,700 people, closing 137 factories and building 4.413 million square metres of new homes for the people being moved.

National People's Congress delegate Zhang Yuanzhu said the dam would be the top issue at this year's annual meeting.

'I am chief of Wanzhou district, which has the largest flooded area and the largest number of citizens to be relocated. We have to give a satisfactory report to the central Government of our work.

'Our long-term aim is to make a successful job of the relocation and bring about the economic resurrection of the area,' he said.

At a meeting last month to review the work ahead for this year, Vice-Premier Wu Bangguo said this year would be critical for engineering work, with the first damming of water and generation of power, and the first use of a lock for shipping.

'The workload is extremely onerous.

'As to the restructuring of the company, we will strive to achieve the listing in 2003,' Mr Wu said.

According to the restructuring plan, the new company will take over Gezhouba Dam Co, which was built around the dam on the Yangtze river at Yichang, which employs 4,800 people in 34 companies and last year posted a profit of 30.5 million yuan on revenues of 340 million.

Many Gezhouba workers resent the proposal that their firm be taken over and included in the new company, regarding it as a form of robbery that the wealth they have created over the past 30 years be removed by someone else.

The big question overhanging the listing and the entire project is the price of the electricity it will sell, as this will be its principal source of revenue to pay back the colossal investment.

Electricity generated by water is the cheapest form of power in China, at 15 fen per watt, compared with 20-30 fen for power generated by coal and 60 fen for that generated by nuclear power.

But the major national grids in the south, east, centre and northeast of the country are de facto independent, while many small stations have exclusive sales agreements with the local governments that built them.

Reforms of the power industry envisage an increasing number of suppliers selling directly to customers, with more intense competition and lower prices.

The project's biggest patron is former prime minister and now NPC chairman Li Peng, who will retire from the post at its meeting next year.

He is likely to face tough questions at this year's NPC meeting as the costs of the project continue to mount and the return on investment looks uncertain.



Cash-strapped dam constructor adds to listings