China's authorities hope to raise up $483m (�300m) through the first sale of shares in the controversial Three Gorges Dam project.

The share sale will go ahead on the Shanghai stock market in the second half of this year to raise funds towards the cost of building the dam, the China Daily newspaper reported.

"The preparatory work for the milestone listing is going well," it quoted Guo Tao, vice president of China Yangtze River Three Gorges Development Project, as saying on Monday.

Over the weekend, one of China's most powerful leaders highlighted the need to make a success of relocating the estimated 1.5 million people who will have to leave their homes to make way for the dam.

Challenge

Vice Premier Wu Bangguo said the relocation of residents from sections of the Yangtze River valley due to be flooded by a huge reservoir posed the greatest ongoing challenge of the project, the official People's Daily newspaper reported on its website.

Mr Wu is in line to take over as China's Premier when its parliament meets in two months' time. He is already a member of the Communist Party's nine-man cabinet.

The huge relocation project has been dogged by corruption and inefficiency, leaving many poorer residents homeless or missing out on promised compensation.

Chinese officials have estimated the overall cost of building the Three Gorges Dam at about $27bn.

Autumn listing

China Yangtze River Three Gorges Development Project set up a subsidiary in September through which it plans to sell shares in the dam, the China Yangtze Electric Corporation (CYEC).

The stock market debut aims to coincide with starting up the first four turbines in the autumn.

About 110 million Shanghai-listed A shares will be sold to Chinese investors and selected foreign institutional investors, China Daily reported.

It will be the first tranche in a series of stock sales planned up to completion of the dam in 2009 to pay for the 26 huge electric generators it will require.

To attract the needed investment, half of net profits will go to dividends for investors.

The dam is expected to end up creating an artificial lake 600km long and about 200 metres deep.

The project - intended not only to supply huge quantities of electricity but to alleviate China's huge flooding problems - has already attracted controversy for the scale of the disruption it is causing, and the potential for environmental damage.