Dams and Landslides

Probe International calls for independent financial audit of China’s Three Gorges dam

Probe International press release
May 16, 2006

Probe International calls for an independent and transparent financial and environmental audit of China’s mammoth Three Gorges dam as it nears completion.

PRESS RELEASE Toronto: Now that construction of the mammoth Three Gorges dam spanning China’s Yangtze River is nearing completion, an independent and transparent financial and environmental audit is needed, says Probe International. “To sort economic fact from fiction, China needs a comprehensive independent audit of the real costs of the Three Gorges project,” says Patricia Adams, executive director of Probe International. The Toronto-based energy and environmental think tank has worked for two decades with Chinese environmentalists and scholars to monitor the Three Gorges project, and led the international campaign against Canadian financing for the multibillion-dollar scheme. “The audit should document all the revenue raised and spent building the dam,” Ms. Adams says. “The project’s environmental consequences and the dam-related disaster risks must also be quantified and taken fully into account.” Canada, Brazil, France, Germany, Japan, Sweden and Switzerland have provided at least US$1.5 billion in export credit to finance the sale of turbines and other equipment for the project. (See “How the Three Gorges project was funded,” on the Three Gorges Probe website, which is published by Probe International.) Export credit agencies, the global dam-building industry, and taxpayers who involuntarily helped finance Three Gorges should demand such an audit, Ms. Adams says. “As long as dam proponents don’t have to face voters at the ballot box, victims in court, industry regulators or bond-holders in stock exchanges, their promises are cheap and nothing more than propaganda.”Power at what cost? Claims by the government and dam authorities that the Three Gorges project will cost about US$25 billion (200 billion yuan) have never been independently verified. No one knows for sure how much money has been poured into the project since construction began over a decade ago, or what costs will be paid out of the dam’s electricity revenues. Nor is it clear whether the official cost estimate includes an additional six turbines in an underground powerhouse that was not part of the original project design. The same financial murkiness applies to the Three Gorges Corporation’s profits. The Three Gorges’ listed subsidiary, Yangtze Power Company, reported profits of US$417.5 million last year but those profits have not been verified by China’s new power-industry regulator, the State Electricity Regulatory Commission. Once the dam’s environmental costs and liabilities are factored into the price, Probe International estimates the true cost of Three Gorges power would be at least several times the government-fixed price of 3 US cents per kilowatt-hour. Just a few of the project costs and liabilities Three Gorges auditors must review:

  • Corruption and abuses in the resettlement of more than one million people.
  • Dangerous build-up of silt in the huge reservoir behind the dam and its impact on project performance and revenues.
  • Reservoir-induced risk of earthquakes and landslides.
  • Serious pollution in the dam’s 660-kilometre reservoir.
  • Damage to fish stocks due to changes in river conditions and blocking of fish migration routes.
  • The dam as a transportation bottleneck.
  • Salt-water intrusion and land erosion problems in the Yangtze estuary near Shanghai.

For more information, contact:
Patricia Adams, Executive Director,
Probe International, Toronto, Canada
Tel. 416-964-9223, ext. 228
PatriciaAdams@nextcity.com

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