Three Gorges funding shortfall

The second phase of China`s Three Gorges hydropower project is facing a shortfall of Yuan25bn ($3bn) according to the official Xinhua news agency.

Funding problems are unlikely to prevent the flagship project progressing, however. The China Yangtze Three Gorges Project Development Corp. (TGPD) is planning to cover the shortfall through loans and domestic bond and stock issues. The company issued Yuan2bn in domestic corporate bonds earlier this year.

The financing problems have provided ammunition for opponents who dispute the economic and environmental viability of the project. The country began last month to resettle another two million people affected by the project, bringing the total number of displaced people to three million.

The TGPD is seeking Yuan11bn in loans from domestic commercial banks and an equal amount in domestic bond and stock issues to cover the shortfall. It will raise Yuan11bn from a corporate bond issue and stock offers.

The entire project will cost Yuan203.9bn. When complete in 2009, it will have an installed capacity of 18 200 MW, and will help to control seasonal flooding of the Yangtze river.