Media Center

News Release

Email this   printer friendly format

ADB to Help Bring Clean and Reliable Hydropower Energy to Gansu Province, PRC

MANILA, PHILIPPINES (8 December 2003) - The Asian Development Bank (ADB) will bring cleaner, more reliable energy to poor communities in Gansu Province, the People's Republic of China (PRC), with the help of a US$35 million loan approved.

The Gansu Clean Energy Development Project - ADB's first loan project in the province - will finance the construction of a 98-megawatt run-of-the-river Xiaogushan Hydropower Plant (XHP), together with substation and transmission lines, to serve Zhangye City.

It will also upgrade the power supply to three poor rural townships - Xishui, Huazhai, and Anyang. A majority of the people living in these townships are considered to be poor and they will receive more reliable electricity directly from XHP.

Present installed capacity is too small to meet the current peak load demand in Zhangye, which is located about 600 km northwest of the provincial capital of Lanzhou. The result is frequent power interruptions and shortages for many of the 1.25 million population. With energy demand projected to rise and no new generating plants to become operational until 2006, the power shortfall is expected to worsen.

Coal fired thermal plants are the main source of energy in Gansu province. "The heavy dependence on coal for energy has resulted in substantial air and environmental pollution, which disproportionately affects the poor," says Piya Abeygunawardena, an ADB Principal Project Economist.

"The project will improve the efficiency and reliability of electricity supply and cut back on the pollution caused by coal generated electricity. About 24,000 people live in the three rural townships, more than 90% of whom are classified as poor. The supply of reliable energy should facilitate the development of small and medium enterprises, thus increasing output and employment.

The planned hydropower plant is the least-cost alternative for generation expansion in Gansu and will represent about 38% of the installed capacity in the Zhangye grid when it is completed in 2007.

The equivalent power from a coal-fired plant would generate a yearly average of 240 tons, 1,919 tons, 1,500 tons, and 366,000 tons of particulate matter, sulfur dioxide, nitrogen oxides, and carbon dioxide, respectively.

Adverse environmental impacts will be minimal, as there is almost no vegetation on the mountains along the river section where the plant will be built and no threatened wildlife nearby.

The power plant construction will generate about 3,000 jobs at its peak and about 100 permanent jobs for operation and maintenance. Construction will be accompanied by the provision of improved all-weather service roads to replace the present dirt track, providing better access to health and education for local people. A community development plan has been formulated to ensure opportunities for Xishui township are enhanced and potentially negative impacts are minimized and mitigated.

The project will also contribute to institutional strengthening. The project's implementing agency, the Xiaogushan Hydropower Company, is a new entity created for the project, according to the business law of PRC.

Training will be provided in project management, procurement and contract supervision, financial management, enterprise reforms and governance, human resources development, environmental monitoring, and energy efficiency improvement.

The total project cost is estimated at $87 million, of which $52 million will be financed through domestic commercial bank loans and equity.

ADB's loan comes from its ordinary capital resources, with a 24-year term, including a grace period of four years. Interest is determined in accordance with ADB's LIBOR-based loan facility.

The executing agency for the project is the Gansu Provincial Government.

More at adb.org/media

Contacts