Power generation from the 6-gigawatt Xiangjiaba project, combined with the 12.6 gigawatt Xiluodu project on which construction started 11 months ago, would be the equivalent of the Three Gorges Project by 2015.

"The start of construction indicates the Xiangjiaba project, whose initial planning started as early as in 1957, has entered a new phase," said Fan Qixiang, vice-president of China Three Gorges Project Corp (CTGPC) which is the builder of the project.

CTGPC is also building the 18.2-gigawatt Three Gorges Project "the world's largest" scheduled for full operation in 2009.

"The project will have to face manifold challenges, including environmental protection and resettlement of residents," Fan told a press conference on the eve of the ground-breaking ceremony.

Vice-Premier Zeng Peiyan inspected the construction site of the country's third-largest hydropower station at Yibin in Sichuan Province yesterday.

The 28.9 billion yuan (US$3.68 billion) project is on the Jinsha River, another name for the upper reaches of the Yangtze ?the longest waterway in China.

In the course of construction, CTGPC will earmark 1.46 billion yuan (US$184.8 million) for environment protection, Fan said.

He said hydropower could help reduce ecological contamination by saving pollution-causing energy resources.

The Xiangjiaba project is expected to generate 30.7 billion kilowatt-hours of electricity annually upon completion, which translates into 14 million tons less coal burnt each year. China is estimated to have consumed about 2 billion tons of coal last year.

About 25 million tons of carbon dioxide and 30,000 tons of sulphur dioxide emissions will be eliminated thanks to the new project, according to project sources. Emissions of carbon dioxide were about 4 billion tons in 2004; and sulphur dioxide, 25 million tons last year.

As the river section where the project is being built is habitat for some rare species of fish, Fan said an aquatic protection zone and a station for fry spawning and release are being planned.

The Ministry of Agriculture announced on Friday that it had started a two-year survey on rare aquatic resources in the upper reaches of the Yangtze, including those at the Xiangjiaba section.

Like the Xiluodu project, the Xiangjiaba project would also play a role in flood control, irrigation and navigation, and help retain silt and so reduce sedimentation in the Three Gorges reservoir, according to CTGPC official Zhou Shuangchao.

Nearly 90,000 people from six counties, three each from Sichuan and Yunnan provinces, will have to make way for the Xiangjiaba project.

CTGPC President Li Yong'an said his company will implement new resettlement regulations issued by the State Council, which prescribe higher compensation for affected people.

At least 8,000 people have already left the site where construction started, according to Xu Junxin, another executive in charge of resettlement for the project.

Apart from the Xiangjiaba and Xiluodu projects, China plans to build 12 hydropower stations in the water-rich middle and lower reaches of the 2,300-kilometre-long Jinsha River by 2020, according to Wei Xikan, deputy chief of the planning and development department of CTGPC.

In response to concerns that the projects would affect the natural habitats of wild pandas, Yu Jianqiu, vice-director of the Chengdu Giant Panda Breeding Research Centre, said that investigations had found that most of the concerns were "unfounded." All the projects were built or are planned on the Yangtze mainstream, far from the giant panda habitats, Yu said.

The Mamize Natural Reserve, the closest habitat, is about 50 kilometres from the Xiluodu project, Yu said.

Yangtze tributaries Xining River and Xisujiao River are the main water sources for Mamize, said Gyina Guqe, chief of the natural reserve.

"When completed, the hydropower station will slightly raise the water levels of the two tributaries and the humidity of the natural reserve will also rise," said Gyina, adding that this will help the growth of the subtropical wildlife in the area, especially the 12,000 hectares of bamboos that giant pandas feast on.