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Private investment for hydropower construction and paid transfer of water resources in Zhejiang
Hangzhou Regional Center(Asia-Pacific)for Small Hydro Power(HRC)
   The private enterprises in Zhejiang province, which cover 2/3 of the total GDP value, have been an important motive power in the rapid economic development during recent 10 years. As one of the infrastructures and basic industries of national economy, the water resources industry is gradually attracting private investors for its stable and huge profits. Therefore, the provincial government of Zhejiang made out a series of preferential policies to encourage the private investment into the water resources sector as to quicken its reform and development, and this 10-year period has been the duration of swift development and attracting the largest investment in water resources sector after the foundation of new China.

   I. The process of private investment in hydropower

   In 1993, the private entrepreneurs started to invest in hydropower projects. In order to alleviate the power shortage, reforms on the investment and the price have taken place. The provincial government determined to mainly use the national fund for the power gird construction, and the private funds should be adopted to develop the power source, which aimed to encourage the share-holding cooperation etc. as the modes for small hydropower (SHP) development, and also the favorable SHP price was made.

   In the development of hydropower resources from 1993, the private fund has been playing the main role in Zhejiang province, and it keeps the installed capacity of hydro rising sustainable. It is roughly estimated that, the installed capacity from the share-holding stations or private owned stations covers 80% of the total newly increased amount. There are some characteristics for the private fund in SHP development, shown as follows:

   1) Different investors cooperate with each other on the basis of mutual benefit. The investors for hydropower development not only include water resources enterprise, electric power corporation, but also consist of the social legal entity, individuals, overseas Chinese and even some share-holding corporations etc. These different investors venture to establish a corporation limited or a share-holding company limited for hydropower development.

   2) The private investment is shifting from the single-unit station with small installed capacity to the key large-sized hydropower station with peak-regulation capability, and during 1994-2001, 25 hydropower stations with installed capacity of more than 10MW each had been put into operation, up to 66% of the total.

   3) These share-holding hydropower corporations, which were firstly located in villages or counties, now become the provincial group corporations in hydropower development.

   II. Effects of private funds in the water sector

   After the entry of private investment into the hydropower field, it brings forward many positive effects as follows:

   1) To promote the rapid development of hydropower. Owing to the participation of private enterprises, the speed of hydropower resources exploitation is much quickened. Every year over RMB1 billion fund swarms into the hydropower markets in Lishui, Wenzhou, Quzhou and other cities from other provinces or even foreign countries, and from 2000 to 2002 the yearly installed capacity amounts to over 180MW (in 2002 the installed capacity of 200MW can be expected), which is over 3 times more than that in the 1980s.

   2) To accelerate the economic & social development. As the private fund is put into the hydropower sector, the local labor force gets to be used, the infrastructures such as communication, water conservancy, electric power etc. be improved, which ultimately betters the living standards of local people and sustain the local economic development.

   3) To optimize the project construction and management. Now, the construction of hydropower stations is strictly managed according to the budget and the work plan, so the cost is generally reduced by 120%-20% or so, and some projects are completed ahead of the schedule, which fully shows the advantage of private enterprises, and achieves higher efficiency and greater benefits.

   4) To promote the scientific & technical advancement. In order to reduce the cost, at the share-holding station, priority is given to adoption of the worldĄŻs state-of-art technologies, such as the optimum design of dam, new materials and automation equipment etc., which act actively in the scientific & technical advancement of hydropower sector. Many share-holding stations have adopted the unmanned control technology prior to the state-owned stations.

   III. Paid water resources development

   In Zhejiang, the institutional reforms on electric power industry started very early, and meanwhile, the local governments always take measures to promote the SHP development, such as protection of the power price etc., and to encourage its competitiveness in water resources development as to optimize the configuration of hydropower resources. On the basis of macro planning and management, the scientific, economical and rational development can be guaranteed. From 2001, the bidding competition for the right of water resources exploitation is gradually standardized.

   For example, in Wencheng County there are over 30 people competing for developing the water resources of a station with 3MW installed capacity, and the county government auctioned the right of exploitation from the initial price of RMB600,000 yuan, and which eventually concluded at RMB3.6 million yuan.

   In Taishun County, the local government auctioned the water resources of 2500kW at the price of RMB1.2 million yuan, and another about 1MW water resources was auctioned at RMB990,000 yuan.

   With the paid transfer of the water resources booming in different areas, the Department of Water Resources in Zhejiang Province is planning to issue a set of management regulations concerned.


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