CHINESE premier Li Peng said the success of the mammoth Three Gorges Dam project would hinge on the resettlement of the 1.2 million people in the area. He was presiding over the dam's ground-breaking ceremony yesterday. Dozens of officials from the central and local governments attended the function at Sandouping, Yichang, Hubei province, where the 90-billion-yuan (HK$81.54 billion) dam will be built. Prior to the start of construction yesterday, experts conducted a 40-year feasibility study and the project was approved by the National People's Congress in 1992, amid heated debate. In a desperate attempt to defend the controversial project, the premier, a strong advocate of the dam's construction, gave an assurance the dam would offer unprecedented business potential for foreign investors and provide huge benefits in flood-control, power supply and shipping conveniences. But scientists and government officials resisted its construction even during Mao Zedong's time, when Stalinist mega-projects were popular. When the project was revived in the 1980s, it unleashed one of the most ferocious protests since the Cultural Revolution. Environmentalists have argued that a dam stretching across almost two kilometres of river will be a financial and environmental disaster. They say it will inundate millions of hectares of farm-land, drain the national treasury, change forever the flow of the river and create the largest forced migration ever produced by a single development project. They also questioned whether the financial benefits of the dam will, in fact, exceed the cost. Yesterday, Mr Li expressed great concern over the massive relocation programme which is seen as potentially the most explosive issue. 'More than one million people will have to be relocated from the area; that will be the key issue in deciding whether the project will be successful or not,' said Mr Li. To fulfil Beijing's 75-year dream of taming the flood-prone Yangtze and providing cheap power to millions, means about a dozen cities along the river will have to be abandoned. Sichuan, Hubei and Hunan provinces will be most affected by the construction of the dam. 'We must not only handle the issue of resettlement well, we will also have to develop the local economy of the Three Gorges Dam area and raise local people's living standards,' he said. The State Council has decided to list the area as an economic open zone that will enjoy certain priorities in the location of construction projects. Some departments of the central Government and relevant provinces will also offer help to the people of the area, the premier said. Mr Li pointed out that the project marked a big event in China's economic reconstruction. According to the premier, the project, upon completion in 2009, will effectively control flooding in central and east China. Shipping conditions will also be improved and a series of new scenic spots will appear in the dam area, he said. In addition, said Mr Li, the world's largest hydro-power station will provide enough power to central and east China and Sichuan province to help create an economic boom in the cities along the Yangtze river. The project will generate 18.2 million kilowatts of electricity. It will discharge of two million tons of sulphur dioxide and 10,000 tons of carbon monoxide will be produced annually, according to Xinhua (the New China News Agency). During the ceremony, Mr Li urged the builders to ensure the construction kept up with top international standards. He believed finance for the mammoth project would be fully guaranteed, as a construction fund had been established and measures to raise money from home and abroad had been taken. Officials already acknowledge that the cost is likely to soar past last year's estimate of 90 billion yuan. Some Western economists have estimated that between now and the time of the dam's completion in 2009, the total cost could reach a staggering 150 billion yuan. Until now, foreign investors have been wary of committing themselves to the high-risk project, but Mr Li stressed that the scheme carried 'unprecedented business potential' for foreign business.