Sunday, July 08, 2007

China to fund $1 bln hydro dam in Guinea: source

ONAKRY (Reuters) - China has agreed to fund the construction of a $1 billion hydroelectric dam in mineral-rich Guinea and renovate a series of state buildings, government officials in the West African country said on Saturday.

The Souapiti dam should allow the former French colony to generate some 750 MW of electricity, officials said. Guinea is one of the world's least developed countries and even parts of the capital city have only sporadic mains power.

A senior Chinese government delegation visiting Guinea had confirmed that China's government-owned Export-Import Bank (Eximbank), which has invested in projects across the world's poorest continent, would fund the dam.

Local media reported that in return, Guinean authorities would guarantee China access to mineral reserves equivalent to some 2 billion tonnes of bauxite, the raw material used in the production of aluminum.

"To guarantee Chinese investment, you have to give them guarantees but nothing has yet been formally decided," said Cece Noramou, a senior official in Guinea's mines ministry.

"They are interested in bauxite but we haven't finished determining the tonnage and so on," he added.

China has been offering low interest loans, debt relief and other incentives to countries around Africa as it seeks to increase its influence on the continent and gain access to natural resources to feed its fast developing economy.

Guinea is the world's top bauxite exporter but most of the population survive on less than $1 a day.

The Chinese delegation also promised debt relief worth around $4 million and an aid package of $5.2 million, according to Aboubacar Cisse, a spokesman for Guinea's foreign ministry.

He said China had pledged to renovate the People's Palace cultural centre in Conakry and the state radio and television centre, partially destroyed when a Guinean air force jet crash-landed on it in April.