Foreign estimates of the construction costs of the Three Gorges Project, which are more than double the official budget, are wrong, said an official in charge of the mammoth hydro-electric project on Friday.

Li Yong'an, general manager of the Yangtze River Three Gorges Project Development Corporation, outlined how the project would actually come in under budget in response to foreign news agency reports of "Western estimates", which put the cost at between 40 billion and 50 billion U.S. dollars.

Li said the project on the middle reaches of the Yangtze, the largest river in China, would cost no more than 180 billion yuan (22.5 billion U.S. dollars), 20 billion yuan less than the initial budget of 203.9 billion yuan (25.2 billion U.S. dollars).

Li attributed the reduction in the costs to the nation's sound economic development since 1993, when construction began.

Low inflation over the last 12 years had kept cost rises to a minimum, Li said.

"The original budget was made on the presumption that the price hikes would stand at five to 10 percent annually during the construction period, however prices have actually dropped in recent years," he said.

It was estimated that low inflation was responsible for shaving more than 14 billion yuan (1.75 billion U.S. dollars) off the original budget.

Low interest rates and strict financial management also contributed, Li said.

The Three Gorges Project is expected to be completed by 2008, a year ahead of schedule, said Cao Guangjing, deputy general manager of the China Yangtze River Three Gorges Project Development Corporation.

The Three Gorges Project was begun in 1993, and was scheduled to be completed in 2009.

He said all construction targets had been met ahead of schedule, allowing the entire project to be completed a year ahead of schedule.

Early completion would further reduce costs, said Li.

The Three Gorges Project, including a 2,309-m-long, 185-m-high dam with 26 power generators, is expected to generate 84.7 billion kwh of electricity annually when it is completed.

It is also expected to control flooding on the Yangtze, fuel industrial growth in the area and improve shipping.

By the end of last month, 126 billion yuan (15.75 billion U.S. dollars) had been spent on construction. More than 100 billion kwh of electricity have already been generated, earning 25 billion yuan (3.125 billion U.S. dollars) in revenue.

Source: Xinhua