(May 21, 2009) Shares of the Yangtze Power Company—operator of the Three Gorges dam—shot higher this week after the company announced that it will acquire the remaining 18 turbines at the Three Gorges dam from its parent, China Three Gorges Project Corporation. The deal is expected to be a blockbuster for the Beijing-based company, as it predicts net profit will increase by as much as 60% this year. The company already owns eight of the 26 turbines.
While the deal is a boon for Yangtze Power shareholders, environmentalists decry the sale as a swindle of Chinese ratepayers and taxpayers. This so-called `privatization`of the world`s biggest hydro dam—Chinese style—means the profits are privatized while the costs are socialized, says Grainne Ryder, Probe International electricity industry analyst.
The lucrative, revenue-earning turbines are being sold off at a sweetheart price that doesn’t reflect the full costs of generating the power. While the power company will enjoy higher revenues, Ms. Ryder says, the increasing and ongoing costs of the dam will continue to be paid for by the Chinese citizenry.
The government says it has already spent 180 billion yuan ($26.35 billion) on the dam, but many critics believe the true cost might be twice as much. Caijing – a financial magazine — and local newspapers recently reported that 98.9 billion yuan ($14.4 billion) would be needed over the next decade to deal with the social and environmental costs of the dam. Nearly 40 billion yuan ($5.8 billion) of this money is expected to be spent on environmental protection alone. Meanwhile, all Chinese electricity consumers must continue to pay into the Three Gorges Development Fund to cover the ever-rising resettlement costs, geological disaster prevention measures and investments in water quality improvement.
Probe International, May 21, 2009
Categories: Yangtze Power