(June 3, 2010) A recent restructuring by China’s Yangtze Power Co., the Shanghai-listed subsidiary of the Three Gorges Project Development Corporation, will see the company acquire full ownership of the only profitable part of the controversial dam—the generators—while assuming little-to-none of the environmental and social costs.
These costs will continue to be paid out of ratepayers’ pockets: since 1992 electricity consumers in the country have been charged a special fee that went into the Three Gorges Project Construction Fund. With construction of the dam now complete, that fund was recently renamed “the State Key Water Project Construction Fund.” Ratepayers will continue to pay the special charge of 0.007 RMB per kilowatt-hour, but now to “deal with problems in the period following the completion of the Three Gorges project.”
By the end of 2006, about 72.743 billion yuan ($10.6-billion) had been paid into the Three Gorges Construction Fund—but few people know how that money has been spent. Government officials have stonewalled attempts to make the dam’s finances public.
And according to recent reports, the environmental and social costs will continue to grow—with another 300,000 citizens to be relocated and more than $7-billion needed to deal with reoccurring landslides. Another report says a backlog of problems created by the construction of the dam will add nearly $25-billion to the project`s final price tag.
Yangtze Power’s profits will also grow, as the recent restructuring means they’ll own all 26 of the original turbines—plus another six that have been added in a recent expansion. The total generating capacity of the dam will be 22,200 MW. The company now expects its net profit to increase to $922-million in 2009, up from $575-million last year.
As part of the deal, Yangtze Power’s parent company will receive 1.55 billion shares—taking its total stake in Yangtze Power to 69.5 percent. Other state companies, including Huaneng Power, China National Nuclear Corporation and China National Petroleum, also hold major stakes in the company.
The result of the deal will be privatization Chinese-style—where the profits are privatized while the costs are socialized.
The turbine sell-off is also expected to intensify conflicts over dam opeation, with the owners having an incentive to increase the reservoir level to its maximum 175 metres, despite warnings that the higher reservoir level could lead to an environmental catastrophe. Dozens of senior engineers and academics have petitioned the authorities not to raise the reservoir beyond 156 metres.
Brady Yauch, Probe International, June 3, 2010
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