By David Stanway
BEIJING (Reuters) - Beijing needs to toughen up to prevent local authorities and state-owned enterprises breaking the country's laws by building dams and power plants without prior approval, an official with the environment ministry said on Wednesday.
Two giant state-owned power firms, the Guodian Group and the Huaneng Group, came under fire earlier this month after state auditors found they had between them invested more than 60 billion yuan ($9.80 billion) in a series of projects that had not been given the go-ahead by the central government.
The problem underscores the difficulties Beijing faces in trying to impose its will on growth-obsessed local governments and powerful SOEs, especially as it tries to fulfill a promise to reverse decades of damage done to the environment.
Wan Bentai, chief engineer with China's Ministry of Environmental Protection, told reporters that the phenomenon of "constructing without approval" is still rife.
"We need to strengthen our vigilance in order to ban these practices and request local governments and enterprises to stop building these projects until they get the go-ahead," he said.
While Wan said the situation had improved and that no central government-run project would now be allowed to proceed before the full approval process had been completed, experts claim corners are still cut on a local level.
"Almost every mega project in China has been simmering at least for a few years before it is even officially reported," said Zhou Lei, fellow at Nanjing University, who has studied the environmental impact of big projects.
"If you talk to anyone at the local, provincial, village level, you will see that environmental policies are not really a restriction and that everything is negotiable, even if it causes immediate environmental damage."
BUILD AND BE DAMMED
With construction times already protracted, state-owned hydropower developers have constantly sought ways to speed up a convoluted approval process involving local government, several ministries and the State Council, China's cabinet.
State auditors said Huaneng's Huangdeng dam project on the Lancang river in southwest China had begun construction without permission, with around a third of the project built, confirming a Reuters report last year.
Last week, authorities passed an environmental impact assessment report for the Shuangjiangkou hydropower project in southwest Sichuan province, which will house China's tallest dam, at 314 meters. Environmentalists have warned it could damage the local ecosystem and also increase seismicity in a region already prone to earthquakes.
But while it still needs final cabinet approval, activists say construction already began years ago, with a diversion canal and temporary dam already built at the site, a gorge criss-crossed with new roads near Sichuan's border with Tibet.
Firms normally claim that they are doing only the "preliminary construction" required before the project is finally approved, but Wan of the MEP said even that was a violation of state laws.
With power consumption still expected to rise by almost 50 percent in the 2011-2015 period, power firms are under considerable pressure to expand. Hydro developers are also expected to put an additional 70 GW of capacity into operation over the 2011-2015 period.
Experts say the firms - in cahoots with local authorities - choose to invest heavily in a project in the hope that they can present the central government with a fait accompli once it finally reaches the approval stage.
"There is no way to turn it back because they have put a lot of money into it already to make it happen," said Zhou. ($1 = 6.1215 Chinese yuan)
(Editing by Muralikumar Anantharaman)