China Three Gorges Corporation
The Three Gorges Corporation (TGC) was initially set up by the Chinese government in 1993 to oversee the construction and later the management of the Three Gorges Project. TGC acquired China International Water and Electric Corporation (CWE), an overseas Chinese construction contractor in 2008, and has used the company ever since as a platform to develop its overseas business.
TGC specializes in the construction of large dams. However, increased risks and costs associated with tougher environmental protection laws and resettlement requirements in China have forced TGC to also examine wind and nuclear power projects.
TGC is the most capitalized company out of the second tier dam builders through the sale of power units in China, export credits, debt re-issuing and has an annual income of US$3.23 billion from power generation. TGC is in the position to invest in overseas projects. TGC also has an agreement with China EXIM Bank to provide it with preferential treatment for its overseas projects.
TGC holds controlling shares in China Yangtze Power, which launched its initial public offering on the Shanghai stock exchange in 2003 raising 10 billion RMB. Yangtze Power was founded by several large power utilities including Huaneng and Gezhouba.
TGC has a broad and general commitment to build power plants, which develop the local economy, improve the environment and benefit immigrants; and claims to be a responsible company.
Relating to the management of the Yangtze River Basin in China, WWF China, the Nature Conservancy and TGC signed a five-year memorandum of understanding on 29 March 2010 to further cooperate on the implementation of sustainable hydropower standards and environmental flows.
TGC's subsidary CWE participated in the drafting of China's Overseas Project Contracting Industry guidelines on social responsibility. However, the environmental and social commitments contained in the industry guidelines are broad and vague.
China's going out strategy is part of its core business strategy. TGC aims to have around 25% - 30% its profits from overseas projects. The General Manager of TGC, Chen Fei, stated that by 2020, TGC's global generating capacity would be 60,000 MW, and that TGC would have built more than half of the ten biggest hydropower stations in the world. TGC is also pursuing the more profitable build, own and transfer contracts rather than simply going after construction projects.
TGC has inherited Pakistan as a key market from its acquisition of CWE but it has also completed projects in Sudan (Merowe Dam), Kazakhstan and in South-east Asia.
Case study: Nam Leuk - Laos
The Nam Leuk Hydropower project was promoted by the Asian Development Bank and the Japanese and Lao governments as a way to lift Laotians out of poverty and conserve the fragile Phou Khao Khouay National Protected Area. The project was completed in 2000.
Thousands of Laotians have suffered livelihood losses and health impacts because of Nam Leuk. The $130 million project, which diverts water from the Nam Leuk to the Nam Xan river, has caused declines in fish populations, submerged riverbank vegetable gardens and affected dry season water supplies. Promises of compensation have not materialized.
The project is located in the Phou Khao Khouay National Protected Area in Vientiane Province. Although it was approved, in part, to protect Phou Khao Khouay, management of the protected area is inadequate and revenues are not being properly allocated towards the protected area.
CWE won the civil contract however its performance did not meet international environmental and social standards. The National Park area was damaged during the construction of the dam because CWE's work and level of supervision and monitoring fell short of international standards. At one stage the ADB sought a suspension in project works because of the serious environmental impacts. In the ADB's project completion report, which noted "... despite the best efforts of the Electricite du Laos, the panel of experts and the ADB, only small improvements in these standards occurred."
At the management level: CWE also failed to meet numerous key deadlines, got bogged down in administrative difficulties linked to the cutting down of tress in the National Park area and experienced significant delays. At times, the amount of work carried out by CWE was at times so insufficient that CWE could not be paid and hence suffered serious cash-flow problems, which endangered the completion of the entire project. The ADB assessed CWE's management capabilities as not up to international standards and that overall performance as extremely poor.
What you can do: tactics and strategies
If CWE is a contractor for your local project, familiarize yourself with the China's Overseas Project Contracting Industry guidelines on social responsibility. In the absence of any company environmental or social policies, this forms a minimum performance standard.
If local environmental and resettlement laws in your country set a lower standard, you could consider a campaign to pressure the company commit to ensuring that its standards are no lower than Chinese laws.
Company spokesperson: Sha Xianhua, Vice General Manager
Department: News Centre
Email: email@example.com, firstname.lastname@example.org
Tel: + 86 (717) 676 7369
President: Cao Guangjing (曹广晶)
No.1 Jianshe Road,Yichang,
Hubei Province, China, 443002
Tel: + 86 (717) 627 6666
Fax: + 86 (717) 627 0088
China Three Gorges in the News
China's Three Gorges Corp ready to invest $15b in Pakistan (April 7, 2011)
Three Gorges Project Corporation releases 2010 CSR report - further reporting in Chinese (June 20, 2011)