KUNMING: Construction work began yesterday on what will be China's second largest hydropower station on the international Lancang-Mekong River.

Situated in the middle reaches of the river in Dali Bai Ethnic Autonomous Prefecture of Yunnan Province in Southwest China, Xiaowan Hydropower Station will have a total installed generating capacity of 4.2 million kilowatts. It will be second only to the Three Gorges project on the Yangtze River.

About 22.2 billion yuan (US$2.7 billion) will be spent on construction, the largest investment of this kind in the province. The project is scheduled to be completed in the year 2012.

The power station is a key part of China's west-east power-transmission plan. It will not only be a milestone in the western development strategy but also be a great incentive for the economic-adjustment and poverty-alleviation efforts of Yunnan Province, said Bai Enpei, secretary of the provincial committee of the Communist Party of China.

Known as the "Oriental Danube," the Lancang-Mekong River originates in the Qinghai-Tibet Plateau and runs 4,880 kilometres through Laos, Thailand, Myanmar, Cambodia and Viet Nam.

According to Kou Wei, general manager of the Lancang-Mekong River Hydropower Development Co, the river has great potential for large-scale hydropower generation.

The Xiaowan Hydropower Station is the second of eight planned hydroelectric power stations on the Lancang-Mekong River and it will be the largest water-conservancy project in Yunnan.

Due to complicated geological conditions, the project faces many technical and construction problems and more than 30,000 people in the dam area will need to be relocated, said Kou.

According to a memorandum signed between China and Thailand, power stations on the Lancang-Mekong River will start providing electricity to Thailand in 2013.

The Mekong River basin has 13.5 million hectares of cultivated land, which is prone to flooding in summer and lacks irrigation in winter.

When the Xiaowan Hydropower Station starts operating, the newly formed 15 billion cubic-metre reservoir will reduce the amount of water flowing downward by 17 per cent during the rainy season and increase the flow by 40 per cent in the dry season, said He Daming, director of the Asian International River Centre affiliated to Yunnan University.

The construction of a 292-metre-high dam will block 35 per cent of the silt now released into the lower reaches of the river. This will aid the development of agriculture and fishing in northern Thailand and the Vientiane Plain and facilitate navigation on the river.

China and Laos organized trial shipping runs on the river in 1990. The river was opened up for commercial navigation simultaneously in China, Laos, Myanmar and Thailand last June.

Xinhua contributed to the story