MANILA, Philippines, Nov. 22, 2010 -- A project to improve the efficiency of water reservoirs in the Shandong province in the People's Republic of China (PRC) has received financial backing from the Asian Development Bank (ADB).
A $29.8 million loan for the 'Risk Mitigation and Strengthening of Endangered Reservoirs' in Shandong Province Project has been approved by ADB's Board of Directors. The loan will rehabilitate nine ageing dams and hopes to set the standard for efficient, safe and cost-effective reservoir operation and management nationwide.
Around 90% of the country's reservoirs were built between 1958 and 1976 and are in poor condition, with many of them unable to store water to the optimum level because of severe leakage. As a result, they cannot control floods, supply irrigation and household water year-round, or generate hydropower.
In response, the PRC has been carrying out a phased rehabilitation program since 2001, including in Shandong Province - the country's second most populous region where water scarcity is a major problem and where saltwater intrusion into coastal catchments has undermined the quality of available water resources.
Through the rehabilitation of the dams, the ADB loan will provide technical guidelines for rehabilitation, methodologies for estimating the probability of dam failure, a reservoir portfolio database and a safety management model. Training will be given to staff in the provincial and local governments to develop their management capabilities.
The loan followed ADB announcing last week that it would be investing up to $20 million for its first ever private equity fund to solely support the development of water-related infrastructure (see Water & Wastewater International story).
"This initiative will reduce the risk of reservoir failure as well as protect lives, property and livelihoods downstream where poverty levels are high. It will also provide more water for agriculture and household use, improve the quality of reservoir releases, preserve water quality and improve groundwater resources," said Yoshiaki Kobayashi, water resources management specialist in ADB's East Asia Department.
The loan, from ADB's ordinary capital resources, makes up around 33% of the total project cost of almost $90.1 million. It has a repayment term of 25 years, including a grace period of five years and an annual interest rate determined in accordance with ADB's LIBOR-based lending facility. The government of the PRC, the Provincial Government of Shandong, and county governments will finance the remaining amount.
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