The central government will increase its investment in the ambitious south-to-north water diversion project, Zhang Jiyao, minister of the office of the project's commission under the State Council, said.

Following the construction of the two eastern sections last year, China will kick off eight new sub-projects in the first phase of the eastern and central sections by the end of this year - five in the eastern section and the others in the central section, Zhang said yesterday.

According to the original outline of the water diversion project, the total investment for the major sub-projects of the eastern and middle sections is 124 billion yuan (US$14.94 billion). Of this, 24.8 billion yuan will come from the state budget and national debt; 55.8 billion yuan will be in the form of bank loans; and the other 43.4 billion yuan will be raised through other financing channels.

"Considering the project's heavy burden of repayment of loans and payment of interests to banks, the State Council has made a decision to increase the investment in the ambitious water diversion project, while reducing the amount of bank loans and diversifying financing channels," Zhang said.

He did not disclose how much will be added by the central government.

"The annual investment in the water transfer project will be intensified in the years 2005 and 2006, to reach 24.8 billion yuan," he said.

Currently, water prices are still low in the six provinces and municipalities in water-short north China, namely Beijing and Tianjin cities, and Hebei, Shaanxi, Shanxi and Shandong provinces, which will receive water from China's longest river, the Yangtze. According to experts, the water price hike potential in those areas is around 0.5 yuan to 0.8 yuan per cubic meter.

(Eastday.com December 27, 2003)