The company, which has interests in three power plants in Shangdong, said on-grid power output rose 15.5 per cent last year to 8.78 million megawatt hours from 7.61 million MWh a year earlier.

The rise in on-grid power output helped counter the effect of the failure to raise tariffs last year.

This explained why the company was able to achieve a 16.37 per cent rate of return on average net fixed assets, including some which were still being built.

The board of directors recommended a year-end dividend of 0.2 yuan per ordinary share, which would bring the dividend payout for the year to 0.6 yuan per share.

The company has submitted a proposal for a tariff increase. With the easing of inflation in China, it was in a better position to negotiate for a rise, it said.

'It is our belief that demand for power in China, particularly in Shangdong, will continue to grow in the coming years,' the company said.

'The company will continue with its expansion in order to meet this growing demand.' Electricity consumption in Shangdong rose about 12 per cent a year between 1985 and 1994.

The company has obtained approval from the Chinese Government for a feasibility study on a Rizhao Plant, although it has yet to be given the go-ahead for the project.

The plant will have a projected capacity of 2,500 MW, to be built in stages.

Construction of the second phase of its Weihai Plant began last year.

The second phase will consist of two 300 MW generators.

The company plans to instal two new 600 MW generators in the third phase of its Dezhou Plant.

It already has the government's blessing for the project and is waiting for official approval of its feasibility study.