ADB to Help Improve Dam Quality in PRC's Shandong Province

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is helping water-scarce Shandong province in the People's Republic of China (PRC) to rehabilitate and improve the efficiency of its water reservoirs.

ADB's Board of Directors approved a $29.8 million loan for the Risk Mitigation and Strengthening of Endangered Reservoirs in Shandong Province Project. The loan will rehabilitate nine ageing dams, which will set the standard for efficient, safe and cost-effective reservoir operation and management nationwide.

"This initiative will reduce the risk of reservoir failure as well as protect lives, property and livelihoods downstream where poverty levels are high. It will also provide more water for agriculture and household use, improve the quality of reservoir releases, preserve water quality and improve groundwater resources," said Yoshiaki Kobayashi, Water Resources Management Specialist in ADB's East Asia Department.

Around 90% of the country's reservoirs were built between 1958 and 1976 and are in poor condition, with many of them unable to store water to the optimum level because of severe leakage. As a result, they cannot control floods, supply irrigation and household water year-round, or generate hydropower.

In response, the PRC has been carrying out a phased rehabilitation program since 2001, including in Shandong Province - the country's second most populous region where water scarcity is a major problem and where saltwater intrusion into coastal catchments has undermined the quality of available water resources.

Through the rehabilitation of the dams, the ADB loan will provide technical guidelines for rehabilitation, methodologies for estimating the probability of dam failure, a reservoir portfolio database and a safety management model. Training will be given to staff in the provincial and local governments to develop their management capabilities.

"ADB's assistance will give the provincial and local governments access to international expertise in rehabilitation and management, and establishing models which can be replicated throughout the PRC," Mr. Kobayashi said.

ADB is also providing a technical assistance to draw up model plans for integrated water use and flood management in a selected river basin in the province. ADB is providing a $300,000 grant from its concessional Technical Assistance Special Fund, while the Multi-Donor Trust Fund, under the Water Financing Partnership Facility, is extending a $200,000 grant, which will be administered by ADB. The Fund includes contributions from the governments of Australia, Austria, Norway and Spain.

The loan, from ADB's ordinary capital resources, makes up around 33% of the total project cost of almost $90.1 million. It has a repayment term of 25 years, including a grace period of 5 years, and an annual interest rate determined in accordance with ADB's LIBOR-based lending facility. The Government of the PRC, the Provincial Government of Shandong, and county governments will finance the remainder.