Electricity generator to beef up capacity

HUADIAN Power International Corp said it plans 17 billion yuan (US$2.1 billion) in capital spending this year as it expands capacity to meet energy demand.

Expenditures for the fourth-biggest Hong Kong-listed Chinese mainland electricity producer will reach 11.5 billion yuan next year, Managing Director Chen Jianhua said. The utility's generating capacity will rise to 20,000 megawatts by the end of 2007, double that of 2005, he said.

Mainland power producers are increasing capacity to supply electricity in the world's fastest-growing major economy. Huadian benefited from a government decision to allow it to raise rates and coal prices that failed to sustain the pace of increases that led to record costs for generators a year earlier.

The utility has set a target of producing 5 percent of its electricity from renewable sources including biomass and wind power by 2010 and 10 percent a decade later, Chen said.

Huadian is investing in two wind-power projects in the eastern provinces of Jiangsu and Shandong, building two units with 200 and 100 megawatts of capacity, said Tao Yunpeng, head of the finance department. The investment for the projects will be 1.6 billion yuan and 800 million yuan and operation could start later this year, he said.

Shares of Huadian rose for the first time in three days, gaining 1 HK cent to HK$1.95 (25 US cents). The stock has declined 1.5 percent this year.

Huadian's unit fuel cost in the first half of this year was 159.5 yuan a ton, 1.6 percent lower than last year, Chen said. Coal prices will extend declines in the second half of this year because supply is sufficient to meet demand, he said.

First-half net income rose 15 percent to 536 million yuan, the Shandong-based company said last week. That beat the median profit estimate of 519 million yuan. Sales increased 11 percent to 7.11 billion yuan.


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