The World Bank's Board of Executive Directors approved yesterday a
US$145 million loan for the China Yixing Pumped Storage Project.
The project will increase the overall efficiency of the power
sector in
Jiangsu
Province through the design and implementation of a
far-reaching restructuring of the sector to further competition at
the generation level and provide large consumers access to
generators.
It
will also ease acute peaking problems by constructing a pumped
storage plant (4 x 250 MW) in Yixing and improve the generation mix
that would create the conditions for more flexible dispatch and
improved supply reliability, an essential requirement for well
functioning competitive markets. The Jiangsu power grid faced major
problems to meet peak demand during the summer of 2002 because of
the very high growth of commercial and household demand.
This project is in line with the strategy developed in the World
Bank's Country Assistance Strategy (CAS), as well as the
government's strategy which aims to gradually transform the power
sector of provincial and regional systems into a diversely owned
market based industry through comprehensive restructuring, and to
create a comprehensive modern regulatory framework for the sector.
"This project is expected to boost the economic development of
Jiangsu Province by mitigating and eliminating institutional and
technical constraints that have prevented the power system from
expanding and operating efficiently," says World Bank Task Manager
for the project Zhao Jianping. "The project also contributes to
widespread state owned enterprise and governance reform as well as
development of the financial sector."
Other benefits expected from the project include:
- Implementation of the government's new power sector reform
strategy will benefit from international experience in power sector
restructuring and the development of power markets.
- The pioneering work related to the commercialization of the
transmission and distribution segment in Jiangsu Province will
provide valuable inputs to the central government decision-making
process in developing a strategy to separate and commercialize the
transmission and distribution business.
- The legal and commercial arrangements defining the relationship
between the pumped storage plant and the power market are
appropriate in order to maximize the benefits of the plant to the
system.
- Capacity building in areas such as the technical design,
construction practices and equipment selection for the pumped
storage hydro plant will be in accordance with leading
international practice and standards.
- The on-going policy dialogue to address the institutional
aspects of wholesale electricity pricing and transmission pricing
is successfully implemented in the major power systems that are
likely to serve as models for other regions and provinces.
- The piloting of consumer direct participation in Jiangsu will
provide a key input to the central government in formulating
restructuring strategy to create competitive markets with multiple
buyers.
(China.org.cn March 21, 2003)