GEC and Kvaerner share in Chinese dam contract

GEC Alsthom, the Anglo-French engineering group, and Kvaerner, the Norwegian engineering group, appear to have won an important part of an $800m (pounds 500m) contract to provide eight of the first 14 turbines to be installed at The Three Gorges dam in China.

The dam, which will attempt to tame the Yangtse River, will be the largest in the world and will cost up to US$30bn (pounds 19bn) to build. But statements from the two companies yesterday left the precise status of the contracts in doubt.

A statement from Kvaerner in Oslo said its Kvaerner Design and Technology unit had been chosen to deliver the eight turbines. The core components for five of the turbines will be produced under the management of Kvaerner Energy in Norway and China. The three other turbines will be produced by GEC Alsthom based on a Kvaerner design, the company said. But a parallel announcement from GEC Alsthom in Paris said talks with China over its participation in the Three Gorges dam project had not been completed.

"We have high hopes that the contract will be finalised in coming weeks, but it has not been finalised yet," a GEC Alsthom spokesman said.

Industry sources suggested GEC Alsthom was not satisfied with the size of its part of the contract and hoped to negotiate better terms before the final signature. According to the sources, GEC Alsthom's share of the total pounds 500m order is around pounds 125m, less than that of the rival bidder Siemens, the German electronics giant.

Other consortia bidding for a share in the contract include Siemens and Voith of Germany and General Electric of the US, and Asea Brown Boveri the jointly owned Swiss and Swedish engineering group based in Zurich. Last week a Seimens spokesman in Peking was quoted by Agence France Presse as saying its consortium would supply six of the 14 turbines and generators required for the first phase of the project, while ABB would provide eight generators.

The Chinese Yangtse Three Gorges Project Development, the Chinese government body awarding contracts has so far refused to be drawn on the winning bids, although its has promised an announcement in the next few days.

The initial contract for turbines and generators is only a small part of the total cost of the project but is being keenly fought because of the toe-hold the winning suppliers will create in potentially the world's biggest market.

When finished in 2009 the project will have created a dam, capable of generating enough electricity to supply 10 per cent of China's electricity needs.