BEIJING,Aug.6 (Xinhuanet)--A new agency directly under the State Council will be set up soon to plan and administer China's massive South-North Water Diversion Project.

    "The organization will be set up within two weeks," an official from the Ministry of Water Resources told China Daily yesterday. The official refused to be named.

    Another official surnamed Lu, from the ministry's existing South-North Water Diversion Project leadership group, confirmed the news.

    "My group will be part of the State Council office," said Lu.

    Lu said his group is planning to relocate local residents, who will make way for the "middle route" of China's massive south-north water diversion project.

    He said about 200,000-300,000 people, mainly in Central China's Hubei and Henan provinces, will be displaced.

    "There is nearly no relocation along the eastern and western routes of the diversion project," said Lu.

    The massive project, which began construction in December 2002, will divert water from the Yangtze, China's longest river, to the country's drought-affected north through three diversion routes. 

    Xinhua News Agency reported that the first phase of construction of the project's eastern and middle routes will cost 124 billion yuan (US$15 billion). And once the first phase is completed, it will be able to divert about 13.4 billion cubic metres of water from the Yangtze to the north annually.

    To ensure the Yangtze water flows northward, the wall of the Danjiangkou Reservoir which will supply water to the middle diversion route must be raised by 14.6 metres to boost its water storage capacity by 1.16 billion cubic metres to 29.1 billion cubic metres.

    However, some locals will have to move when the dam wall is raised and more land is inundated.

    The number of people affected is now likely to be about 275,000, 260,000 of whom are farmers in five cities and counties in Hubei and Henan provinces.

    About 90 per cent of locals now living in the areas to be submerged by the Danjiangkou Reservoir expansion are willing to move to escape poverty, according to departmental sources.Enditem