Jun 20, 2008 -- BBC Monitoring
United States-based energy company AEI has bought a 50 per cent stake in a
power plant in Henan province, a rare deal in the mainland's
profit-challenged power sector.
AEI said yesterday [19 June] that it had bought the stake in the
270-megawatt cogeneration power plant, Luoyang Sunshine Cogeneration, which
produces electricity and heat in Luoyang, as part of its foray into the
mainland's electricity market.
The plant, with two 135MW steam turbine generators, solely supplies steam
and heat to industrial and residential users in Luoyang New District, a
cluster of city government offices, an industrial zone and a town centre.
AEI Asia chief executive Colin Tam said in a statement that the deal marked
the Houston firm's first power-generation investment on the mainland, paving
the way for more acquisitions.
Other shareholders of the project are local investors Luoyang Hailong Power
Investment and Consultancy with a 33 per cent stake, and Luoyang City Gas
General Co with a 17 per cent stake.
Intrigued at the timing of the deal, one analyst said the word "acquisition"
was rare in the electricity market. Power producers generally have suffered
squeezed profit margins, and some have even slipped into losses as a result
of the stubbornly high costs of coal and gas, and the state's policy of
restricting tariff adjustments.
"It is a brave move," an analyst with a European brokerage said. "All fuels,
especially coal and natural gas, have seen prices go up so much in the past
few months, along with crude oil prices, and the upward trend will continue
in the remaining half of this year."
A Citigroup report said spot coal prices with a heat content of 6,000
kilocalories per gram at Qinhuangdao, the mainland's biggest coal trading
port, had surged 37 per cent in the first five months of this year.
In January, AEI broke into the country's energy sector by buying two gas
supply projects.
Source: South China Morning Post website, Hong Kong, in English 20 Jun 08
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