The Three Gorges Project Construction Committee will draw up its first annual supervision plan next month.

The move follows reports that $34.8 million of funds earmarked for the project had been misused.

"The plan will effectively monitor the capital flows within the project, and close the loopholes in the process," Wang told China Daily on the sidelines of the fifth session of the 10th National People's Congress.

Funds drawn from banks and those funnelled into work bids will be given priority to prevent embezzlement and corruption.

Wang said a supervision network run by the country's top anti-graft authorities, the finance ministry and banks had been overseeing the project's funds since 1997.

He added that about 90 percent of the misused funds had been recovered.

He said local officials had been responsible for most of the misappropriations, and that few members of the project's management board had been involved in such behavior.

The National Audit Office (NAO) reported in January that 272 million yuan ($34.8 million) that had been allocated to support the resettlement of residents displaced by the Three Gorges project in 2004 and 2005 had been misappropriated in Hubei Province and Chongqing Municipality.

The central government allocated 9.6 billion yuan ($1.2billion) in resettlement funds in 2004 and 2005.

However, instead of supporting resettlement work, the money was used to open local government-run businesses, repay the debts of other local departments, pay salaries to employees of administrative departments and build more office buildings and houses for people unrelated to the resettlement project. It was also used to pay off bank loans.

Wang said the misuse of funds had not affected his committee's work to resettle people affected by the project.

More than 1.2 million people, or over 85 percent of those covered by the most recent plan, have been resettled.

But due to lack of arable land and job vacancies, the unemployment rate among the displaced people reached a record 12 percent last year.

Efforts are being made to create more jobs for the resettled population, said Wang.

Professional training programs for the displaced people are expected to help them find jobs in other regions. About half of the five million rural residents affected by the dam work outside the region.

Authorities in the region are also planning to make full use of barren mountainous land in the region to ease land shortage.

"The region will catch up with the national average employment level within five years," Wang said.

The central government also plans to invest 55 billion yuan ($6.88 billion) in a bid to settle residents relocated by the project and support local industries to provide job opportunities over the next five years.

The funds will also be used for infrastructure construction, environment protection and social development in the region.

Chongqing Municipality and Hubei Province have also made it mandatory for at least one member of each relocated family to be employed in the non-farming sector by the end of this year.

Launched in 1993 at an estimated cost of 180 billion yuan ($22.5 billion), the Three Gorges Dam Project on the middle reaches of the Yangtze River will eventually have 26 generators with a combined power-generating capacity of 18.2 million kilowatts.

It will be able to generate 84.7 billion kilowatt hours of electricity annually.

(China Daily 03/09/2007 page7)