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LESSONS:

People’s Republic of China: Gansu Heihe Rural Hydropower Development Investment Program-Erlongshan Hydropower Project

sector: Energy | country: China, People’s Republic of

The success of the Erlongshan Hydropower Project resulted from a combination of strong government ownership and the commitment of the Erlongshan Hydropower Company. These factors ensured that any actual or potential problems were quickly and effectively resolved.

Continuity of officials and staff at the executing agency, implementing agency, and ADB, who were involved in the development, implementation, and operation of the project, was maintained throughout the project. This continuity, together with stability in personnel capacity, was an important factor in the success of the project. While this lesson may be self-evident, it is not easily achieved and is often overlooked.

The project demonstrated the importance of retaining qualified and competent consultants at the project preparation stage. Knowledge of the project design and implementation that was transferred from ADB to the government was highly valued, and officials expressed the view that this was more important than the loan financing.

The project was the first tranche of the first multitranche financing facility (MFF) investment program developed in the PRC. Based on the experience from this project, the MFF modality should be suitable for future projects in the PRC where there are discrete components. The MFF enabled sequential construction and financing requirements that were funded by separate tranches, thus limiting unnecessary duplication of administrative effort and approvals.

The timely availability of counterpart funding prevented cash flow problems from arising, which could have delayed project completion. Because counterpart government funding was timely, there were no delays and the project was completed early.

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