Announcement of The World Bank's Project to Accelerate Development and Safeguard Growth in Xiaolangdi, China on April 15, 1994

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 News Release No. 94/80EAP Contact: Peter Stephens (202)458-0344 Erin Bums (202)458-2210 External Affairs - East Asia & Pacific Region Acceleratina Development and Safeguarding Growth in Xiaolangdi. China Washington, D.C., April 15, 1994 -- Multipurpose dam and resettlement projects totaling $2.8 billion will control flooding, provide water for household use and irrigation and generate power for the fertile and heavily populated Xiaolangdi region along the Yellow River in northern China. The World Bank's Board of Directors last night approved a loan of $460 million for the dam and an International Development Association (IDA)' credit of about $110 million to support the resettlement project. The Xiaolangdi multipurpose project will finance construction of a 154 meter high rockfill dam, which will have a reservoir, fifteen large tunnels and a spillway to divert the river, handle floods, generate power and control the flow of sediment in the river. According to Daniel Gunaratnam, World Bank task manager, "the dam will protect about 103 million people and billions of dollars in housing, roads, factories and power plants from the very real possibility of catastrophic floods. It will also reduce sediment flow and deposits downstream, stabilizing the flow of the river, and helping keep it from Xiaolangdi's Projected Energy Production breaking through its dikes." 6,O0D 5,@ ~-5,37--5,429 The area that will benefit now has little 5 , protection against flooding. Estimates are that a 3, ', major flood could cause billions of dollars in 3,0 3,06 damage and the loss of thousands of lives. o 2= Flooding problems along the Yellow River date back thousands of years, as do China's efforts to ." regulate the river. 0 1999200 2000-2001 2001-20 20-20 2008-2011 2011- Project Has Multiple Benefits The projects benefits, however, are not limited to flood control. A power station will be built at the dam site, which will provide almost 5,400 gigawatts2 an hour by early next century, helping to meet China's growing energy demand. 'IDA is the Bank's affiliate for concessionary lending and lends only to the poorest member countries. ( 2A gigawatt equals one billion watts. "Harnessing China's vast hydropower potential is also as a clean energy option and a way of ameliorating the harmful effects of burning large quantities of low grade coal as the country currently does, " Mr. Gunaratnam says. The project will also stabilize currently erratic supplies of water to over 2 million hectares of land in 14,OW 12M Henan and Shandong. Included in 12,OOD 1s this are an additional 1.2 million 0,= hectares of land that will come under so irrigation for the first time. "This 60WO 5,115 irrigation will increase wheat, corn and cotton crop yields by more than 2 ,000 eight percent across the region," Mr. Gunaratnam says. E lMn.. eiejt U WOnl Pm~ject Resettlement Project 181,000 people will need to move as a result of dam construction and filling of the dam reservoir. A separate project is being undertaken to ensure that these people, and the 300,000 people currently living in the resettlement area, are able to improve their standards of living as a result of the move. The entire $110 million IDA credit is supporting the Xiaolangdi resettlement project. According to Mr. Joseph Goldberg, World Bank Division Chief, this is the first time that a Bank project has had a separate accompanying project for the sole purpose of resettlement. "It reflects the Bank's and China's awareness of the difficulties involved in moving people from one place to another and underscores their commitment to meeting this challenge." Resettlement Will Adhere to the Highest Standard The resettlement process is designed to ensure that people being resettled will have the same -- if not higher -- incomes and living standards and after they move as they did before. Homes, services and land will be equivalent and people will be able to maintain their type ofjob. In addition, the project will give families additional income-earning opportunities through a number of industrial sub-projects. Compensation for people's original property and homes will be worked out through joint assessments between homeowners and the resettlement office. Provisions to protect the people being resettled are codified in both Chinese law and legal loan documents between the Bank and the Chinese Government. 2/. According to Mr. Goldberg, "all efforts -- by both the Chinese Government and the Bank -- are being made so that the Xiaolangdi resettlement project will adhere to the highest possible standard. Resettlement is sometimes seen as an unfortunate consequence of development but if done properly -- as it's laid out in this instance -- it offers a unique opportunity to accelerate development and actually improve people's standards of living." The Chinese Government has been considering the Xiaolangdi multipurpose project for about 40 years. The World Bank formally identified the project in 1989. The Bank loan is extended for 20 years, including five years of grace, at the Bank's standard variable interest rate, which is currently 7.27 percent. The IDA credit is extended for 35 years on standard IDA terms of 10-year grace, no interest and a service charge of .75 percent a year on the disbursed balance. Xiaolangdi -- Financing Resettlement Project Multipurpose Project in USS millions Central Government 359.90 Central Government 1,834.70 Provincial Governments 0.30 Enterprises 47.90 People's Construction Bank 53.20 IDA 110.00 IBRD 460.00 . Total 571.30 2,294.70 A detailed background paper on this project is available upon request. Contact Peter Stephens at 202-458-0344, or fax 202-522-3405. Note that all figures are expressed in US dollar equivalents. 3/.