960408

China scraps

planned bond

issue for

dam project

BEIJING: China has scrapped plans for an initial 1.0 billion yuan ($120 million) of international bonds to fund the Three Gorges dam project across the Yangtze river, the Wen Hui Daily on Monday quoted officials as saying.

Earlier plans to issue the international bonds in 1995 had been replaced by a decision to raise the funds through domestic funds based on China's rapidly growing foreign exchange reserves, the newspaper quoted officials as saying.

The Three Gorges branch of the People's Bank of China, the central bank, recently signed a deal to extend $100 million in loans to the Three Gorges Development Corp, it said.

That was the largest single loan so far to the estimated $24 billion scheme, the world's biggest water control project, that will dam the Yangtze and provide one-ninth of China's total electricity capacity when it is completed in 2009, it said.

"China will definitely not issue the planned $120 million bonds scheduled for last year," an official of the development corp said by telephone.

However, he said it was still possible that China would proceed with plans to issue a tranche of $200 million of international bonds in 1996.

The central bank earlier this year extended $20 million worth of loans to a Three Gorges contractor to import equipment, the newspaper said.

A central bank official said the $120 million loan would be used to finance construction in 1996.

The money would also be issued for the import of modern equipment, including dump trucks and conveyor belts, the newspaper said.

China's foreign exchange have soared in the last two years, hitting a record $80 billion in February, up from $51.6 billion at the end of 1994.-Reuter