Yangtze Diversion Plan Facing Money Crunch - ENN

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SHANGHAI, China − "Thirsty Beijing will begin by 2010 to divert water from the Yangtze River, far to the south, though the massive project is strapped by financial difficulties and severe pollution, state media reported Wednesday. Work on the South-North Diversion Project, one of the world's biggest and costliest building projects, began in 2002.

The plan is to divert 13.4 billion cubic meters (12 trillion gallons) of water a year from the Yangtze River in China's wetter south to arid areas in the north. The first supplies are to reach the eastern province of Shandong in 2007, and Beijing by 2010.

But the project, the total cost of which is projected at US$60 billion (euro46.3 billion), is already over budget, the state-run newspaper China Daily cited Zhang Jiyao, the official in China's State Council, or Cabinet, responsible for the project, as saying. Zhang said the central government, which is covering 30 percent of the costs, would have to raise "special funds" and that local governments, responsible for 25 percent, would need to raise taxes or water rates to be able to pay their shares.

The remainder of the financing is to come from bank loans. Chronic water shortages in China's north have left many cities short of drinking water and hurt economic development plans. Annual water supplies around the capital average 295,000 liters (78,000 gallons) per person, far below the "shortage" level of 984,000 liters (260,000 gallons), according to state media reports. Zhang said severe pollution in waterways along the project was another concern."

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