Economist Intelligence Unit
February 7, 2006

‘It is hard to make sense of the project from a purely business perspective,’ write analysts at The Economist. ‘The project would not survive in a competitive power market.’ Probe International’s Grainne Ryder is quoted on alternatives to megadams.

If all goes to plan, turbines in the Three Gorges Dam will start to roll in June 2003. It will be an historic moment for a project originally conceived by Sun Yat-sen more than 80 years ago. Riding the wave of national euphoria, the management of the Three Gorges Development Corporation (TGDC) plans to float the company in Shanghai, probably later this year. Will the money flood in? The projects’ supporters, including Li Peng, head of the National People’s Congress, say the dam will not simply provide much-needed electricity to China’s seaboard but will also stop flooding and allow sea-tankers to sail up the Yangtze river to Chongqing, thus boosting trade. Its detractors say the project is not only an environmental and social disaster but commercially unviable as well. Drowning in money The dam is the world’s largest-ever infrastructure project in terms of cost. Although it is not scheduled to be completed until 2009, next year is crucial. In 2003, a handful of the power plant’s 26 turbines are to start producing electricity, and the dam to begin storing water. The water level of the reservoir will rise to 135 metres in the first year. Eventually, the 1.98 km-long, 185 metres-high dam will create a 600 km-long reservoir occupying parts of Hubei province and Chongqing municipality. By 2009 the dam is to have a capacity of 18.2m kilowatts (kW) and an annual output of 84.7bn kW hours (kW/h). Estimates of the cost of the project vary. Officially, the total will be Rmb180bn (US$21.7bn). Yet independent analysts believe there have already been serious cost overruns More conservative analysts put the project’s total cost at Rmb208-224bn (US$25-27bn). Others, including Dai Qing, a mainland journalist critical of the project, put it closer to Rmb623bn (US$75bn). According to official figures, some Rmb73bn (US$8.8bn) has already been spent. A further Rmb15bn (US$1.8bn) has been earmarked for this year, Rmb8.7bn (US$1.1bn) of which is to be used for the relocation of displaced residents.