External Evaluator: Hiroshi Oita (OPMAC, Ltd.)JBIC ODA Loan Project Mid-Term Review
Time of Mid-Term Review Field Survey: May 2006
Project Title: The People’s Republic of China “Gansu Small-sized Hydropower Project” (L/A No. CXXII-P145)[Loan Outline]
Loan Amount/Contract Approved Amount/Disbursed Amount: 6,543 million yen/4,633 million yen/4,638 million yen (as of end of May 2006)
Loan Agreement: March 2001
Final Disbursement Date: October 2007
Executing Agency: Financial Bureau of the Gansu Provincial People’s Government
Implemented by Gansu Mingzhu South Hydropower Development Ltd., a subsidiary company of Gansu
Mingzhu Hydropower Development Ltd. in the Gansu Electric Power Company Group[Project Objective]
This project aims to increase the power supply capacity and improve the reliability of the electric power network by constructing small hydroelectric power plants in theLongnan and Zhangye districts of Gansu province. In so doing, the project will help to stimulate the regional economy by promoting investment and mitigating poverty inLongnan and Zhangye districts.
Consultants: (Beyond the scope of the yen loan) :Gansu Water Conservancy and Hydropower Survey Design Institute and Guiyang Hydroelectric Investigation Design & Research Institute of State Power
Corporation
Beijing Anneng Engineering Supervision Co., Ltd. (Supervision of the construction for the Longshou subproject) However, the Longshou subproject ended up beingoutside of the yen loan.
Northwest Investigation Design & Research Institute of State Power Corporation (Design of the Hanpingju subproject)
Contractors: China Water Resources (China) , China State Power (China)
Item[Relevance](1) National policy level

Results of ex-ante evaluation (September 2000)(1) The Chinese government’s power reform directives set forth
between 1998 and 1999 called for the expansion of clean power
resources by taking such steps as the provision of smallhydroelectric power generation in poor rural regions. This matterreceived significant support in China’s 10th Five-Year Plan of
2001-2005.

Ex-post evaluation results as estimated at time of mid-term review(1) Of China’s provinces, Gansu is one of the poorest. It was one of theregions targeted by the Great Western Development policy, agovernment directive set out in 1999 to diminish regional disparities. A
directive to accelerate the construction of “new rural regions” blessedwith infrastructure that could help fight poverty was a major focus of the10th Five-Year Plan (2001-2005) as well as the 11th Five-Year Plan
(2006-2010).
China’s overall demand has been rising, and coupled with the rising oil
prices, energy development is receiving much attention. The facilities

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provided by the present project were constructed during the 10thFive-Year Plan. While helping to meet the urgent need to expand energy
supply sources, it also coincides with a national policy to expand clean
energy sources and mitigate poverty.
(2) Policy level(3) Planning level(2) The construction of small-scale hydroelectric power plants has
been promoted to provide electricity to villages in the poor
mid-western mountainous regions which are rich in water energy
resources and to encourage economic development and help rid
these rural regions of poverty. Among China’s provinces Gansu lags
far behind in economic development. The full provision of electric
power infrastructure in rural regions and cities and towns is
indispensable for their economic development. Small-scalehydroelectric power generation was a heavily emphasizedundertaking under Gansu’s Ninth Five-Year Plan.

(2) In its 10th Five-Year Plan, Gansu Province established a target of
Hydroelectric project developments in Gansu’s Baishui, Bailong, andHei river basins while providing stable power supply in rural regions byimproving the power transmission network. Longshou and Hanpingju
subprojects were prominent Gansu construction projects in the 10thFive-Year Plan, and were given high priority. Through the present
project, the power supply is expected to stabilize, the economy should
develop, and as a result, poverty may be mitigated.

(3) The present project is included as part of the Chinese Farming
Village Electrification Model Small Hydropower Project
Experimentation County. In Gansu’s Zhangye and Longnan
districts, whereas power demand rose by more than 10% in 1999,
supply did not follow suit, and so resolving the electricity shortage
has become a pressing problem. Thus, as the present project
involves the construction of small-scale hydroelectric power
generation stations, it is a matter of high priority.

(3) The Longshou subproject was completed in June 2002, and the
Hanpingju subproject was completed in September 2005. They wereconnected to the Zhangye and Longnan power grids, and have thus
contributed to the stabilization of power throughout Gansu province. In
Hanpingju, because winter is the dry season, power sometimes had to be
drawn from the network, but in the rainy season that lasts for about eightmonths, a surplus of power was supplied to the network. Thanks to theprovision of power facilities, including those provided through thisproject, since 2003 Gansu province has been able to export power toother provinces.
Gansu’s Electric Power Balance (Unit: 100 Million kWh)
2000
2003
2004
Amount consumed
295
398
452
Power generated
280
404
457
Hydroelectrically
114
108
122
generated portion
Thermally generated
166
296
335
portionImports from outside47
44
56
the province
Exports to outside
32
50
61
the province2Source: Gansu Province Statistical Yearbook[Effectiveness](1) Operation and Effect indicators
1) Quantitative effects(Longshou Subproject)
Figures at time ofTarget values (target year

ex-ante evaluation

not established at time of

―

183.6

―

66

―

52 (15MW×3, 7MW×1)

ex-ante evaluation)
Net electric energy production(sales amount)(1) Operation and Effect indicators
1) Quantitative effects(Longshou Subproject)This subproject ended up being outside of scope of the yen loan (it was
conducted using local Chinese funding, and was completed in June
2002).

(GWh)

Revenue from electricity sales(million yuan)
Maximum output (MW)(Beneficiaries: approx. 400,000 people)(Hanpingju Subproject)(Hanpingju Subproject)
Figures at time of
ex-ante evaluation

Target values (target year

Actual figures at the time

not established at time ofof midterm review (May2006)

ex-ante evaluation)
Net electric energy production(sales amount)

―

345

(GWh)

Revenue from electricity sales―

350(sales amount)reached in 2006)(GWh)(expected

tobe

364 (design value)

Undetermined

71 (yearly estimate)

Facilities usage rate (%)

Undetermined

5,051 hours/year(design value) (58％)

Unscheduled

Undetermined

No unscheduled(million yuan)(million yuan)
Maximum output (MW)Net electric energy production
Revenue from electricity sales

104

Target values*―

60 (20 MWｘ3)(Beneficiaries: approx. 2.64 million people)
shutdowns(days/year)

shutdowns expected; sixdays per year (design
value) slotted for repairs

Maximum output (MW)72 (24 MWｘ3)

72 (24 MWｘ3)*Target figures for the Hanpingju subproject were not set out explicitly, but China
has expressed the position that using design values as target figures would be
adequate during the mid-term review. The project was completed in September
2005 (operations began in earnest in January 2006). As for the target year, theexecuting agency had not explicitly selected one. So long as sufficient water could
be secured, the executing agency claims that the target can be reached within 2006.

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・ Regarding the above target figures, there is a disparity between the
dry winter season and the other rainier seasons, but it is estimatedthat they will be attainable within 2006. The demand for power
during the dry season will be covered by power from otherregions—as, for example, from the Bikou hydropower plant.
・ The original role of these small hydroelectric power plants was tocontribute to the economic development of rural villages in theabove regions. Recently, as part of a comprehensive energy policy,
much attention has been given to how the efficient utilization ofwater power resources could strengthen the electric power grid overthe entire region.
・ As for beneficiaries, the Longnan district has a population of
approx. 2.7 million, and Wen county has a total population of
250,000 people.
・ The increase in maximum output from 60MW to 72MW can be
attributed to changes to design details.
2) Qualitative effects
Stimulation of the regional economy, alleviation of poverty, andprevention of air pollution accompanied by an abatement in power
supply shortages and an improvement in the electric power base.

42) Qualitative effects
・ Gansu has recently enacted investment promotion policies thatencourage mergers and acquisitions, lure science and technology
businesses, give preferential treatment to deals that addressenvironmental issues, and provide exemptions and reductions forcorporate and local taxes from 2001 to 2010. As stabilization of thepower supply is a prerequisite for such investment, conditions arethought to be favorable given Gansu province’s abundance ofresources.
・ The project’s target area (Longnan district in Wen county)
constitutes a poor district in Gansu province, in which migrant laboris encouraged. Out of Wen county’s population of 250,000, alreadysome 10,000 are engaged in migrant labor.
・ At the time of the mid-term review, it was not possible toquantitatively confirm a poverty reduction effect, but in the future,stabilization of the power supply to the surrounding area and astable tax revenue from power generation companies are expectedfrom this project. A rising tax revenue should help foster
infrastructure development and alleviate poverty in the target area.
・ It was not possible to quantitatively determine the impact that thisproject had on air pollution at the time of the mid-term review. At
the time of the ex-post evaluation it will be necessary to recalculate
the CO2 reduction effects that the renewable energy can have.
Regional GDP Trends (Unit: 100 million yuan)
2000
2001
2002
972
1,073
1,387

Gansu
province
Longnan
40
43
district
Wen county
3.6
3.8
Source: Gansu Province Statistical Yearbook(2) Factors which may influence the effectiveness and impact
1) Land acquisition and resident relocation
Land acquisitions in Hanpingju come to approx. 90ha, and thenumber of residents to be relocated amounts to roughly 1,000
people (230 households).

5

2003
1,559

56

63

4.6

5.3

(2) Factors which may influence the effectiveness and impact
1) Land acquisition and resident relocation
・ The number of residents relocated on account of land being
submerged by dams came to 142 households or 750 people.
Landslides resulting from dam construction led to the relocation of
95 households or 438 people. Moreover, because a portion ofnational highway 212 would be submerged by dams, a portion had
to be rerouted, leading to the further relocation of 37 households or
138 people. The unexpected increase in the number of relocatedresidents stems from relocations due to landslides as well as the factthat need to divert a portion of national highway 212 was notinitially anticipated.
・ At the time of the relocations, the provincial planning committee
investigated a blueprint for relocating people created by theNorthwest Investigation Design & Research Institute (NIDRI) (aconsultant). After consideration of the benefit to residents,
compensation has been given in accordance of the provisions of that
plan. For the farmland, compensation was transferred directly into
the bank accounts of land owners based on the cadastre (official
register of landownership), taking into account the annual
productivity of the farmland. According to the Wen County People
Resettlement Bureau, this system is not limited to one-time
payments, but rather allows for multiple payments of reparations.
・ Up to present, relocated residents have not expressed any

dissatisfaction with the process, and the homes that they have been
provided with are splendid.
2) Environmental consideration
Plans for water quality monitoring at dam sites:
Longshou subproject: By Zhangye City Environmental Protection
BureauHanpingju subproject: By Wen County Environmental Protection
Bureau2) Environmental consideration
・ During construction and afterwards, no adverse effects on health or
the surrounding soil were detected in the vicinity of the dam.
・ The target of monitoring is water quality, but the conditions andmanner of monitoring have yet to be arranged. The county’s
Environmental Protection Bureau is still coordinating things with
the Longnan City Environmental Protection Bureau. In principle,
water quality will be investigated by taking samples at threedifferent times—once each during the dry season and wet season,and once again when the water level is normal.

(3) Factors which may influence the sustainability
1) Privatization
In the midst of the reform of China’s electric power structure, there
is a need to follow up on management conditions among thoseactually executing projects and to heed the trend towards
privatization.

(3) Factors which may influence the sustainability
1) Present status of the executing agency’s structure (privatization, etc.)
・ The actual executing agency, Gansu Electric Power Company
Group is essentially a holding company. Gansu Mingzhu
Hydropower Development Ltd., which was financed by the group,
has been conducting operation and management of the Hanpingju
power plant through Mingzhu South Hydropower Development Ltd.
Creating institutions with independent accounting systems in thisway can make costs and the scope of responsibilities moretransparent, and it is hoped that this will make it possible to achieve
efficient management and operations.
・ Because Gansu province is now able to supply electricity to otherprovinces, it will be able to use the tax revenue from electricity sales
towards the development of target regions.

2) Electricity Sales Contracts
There is a need to establish appropriate electricity fees. The contentsof the electricity sales contract (including the establishment of theelectricity fees) that is expected to be settled by the time the power
plant begins operation also need to be determined.

2) Electricity Sales Contracts
・ An agreement on electricity sales was signed between Gansu
Electric Power Company, the primary power network administrator
for the entire province, and Gansu Mingzhu South Hydropower
Development Ltd, which operates and manages the Hanpingju
power plant. The contract is renewed annually upon mutual
agreement between the companies.
・ General electricity fees in Gansu province are currently as shown
below. It is felt that this fee structure gives due consideration to thepoor in rural regions.

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Up to 100KWh
0.49 (yuan/kWh)
100 kWh-200 kWh
0.44
200 kWh-300 kWh
0.375
Greater than 300 kWh
0.32
Small-scale hydropower in rural regions
For daily life: 0.20 - 0.30 (yuan/kWh)
For production (irrigation etc.) : 0.06
・ The electricity rates for power sent from the Hanpingju
hydroelectric power station to the power grid is set by the National
Development and Reform Commission, and currently is 0.227
yuan/kWh.
・ The two power companies report that they are making profits, butthere is a need to assess the detail to confirm their financial
conditions.
Information for reference[Efficiency](1) Outputs(2) Project period(1) Outputs【Longshou subproject】
・ Power generators: three 15-MW units, one 7-MW unit
・ Transformers and associated machinery・ Transformer substation machinery・ Steel structures
・ Building materials(1) Outputs【Longshou subproject】
Given the rapid increase in demand for electricity, the subproject has
been viewed as a matter of the utmost importance, and the Chinese
began work on it even before the yen loan had been awarded. JBIC alsostudied ways to assist the subproject, but in the end, financing came in
the form of China's own domestic currency (project completed).

【Hanpingju subproject】
・ Power generation machinery (generators, transformers, etc.)
three 20-MW units
・ Dam construction
・ Power plant and auxiliary facilities (including transmission
lines, etc.)
・ Tunnel construction (including steel structures)
・ Building materials【Hanpingju subproject】
・ Power generation machinery (generators, transformers, etc.): three
24-MW units
・ Dam construction (volume of water stored: 51 million m3)
・ Power plant and auxiliary facilities (including transmission lines,
etc.)
・ Tunnel construction (including steel structures)
・ Building materials(Consulting services)
Outside the scope of the yen loan

(Consulting services)
Outside the scope of the yen loan

(2) Project period
March 2001-March 2004 (35 months)(2) Project period
March 2001-September 2005 (55 months) (Hanpingju subproject only)
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・Longshou subproject: completion expected March 2003
・Hanpingju subproject: completion expected March 2004

・Trial runs were begun July 2005 starting with machine No. 3 andconcluded in September 2005. Full-scale operations are now underway.

Lessons Learned andRecommendations(Lessons learned)
The Longshou subproject was initially expected to be funded by a yen loan, but because increased power demand made the project so necessary
and urgent, it was carried out using domestic funding. In the future, it will be necessary to accurately judge demand estimates and project
implementation schedules when providing yen loans for similar kinds of projects.
(Recommendations)・ Among impact and effect indicators, a reduction in poverty in poor and rural regions through small hydroelectric power generation together
with clean energy measures were confirmed qualitatively. At the time of the mid-term review, however, it was difficult to perform
quantitative evaluations. Related information should be gathered continuously, and the project effect should be confirmed.
・ Indicators that were yet to be confirmed at the time of the mid-term review should be confirmed in the ex-post evaluation.

Indicators set for use attimeof
ex-postevaluation

N/A

・
・
・
・
・

8

Power at transmission terminal (sales amount)
Revenue from electricity sales (million yuan)
Facilities usage rate (%)
Unscheduled shutdowns (days/year)
Maximum output (MW)

(GWh)