HPI buys stakes in power plants from parent for $517m

PUBLISHED : Friday, 06 June, 2003, 12:00am
UPDATED : Friday, 06 June, 2003, 12:00am

H share Huaneng Power International (HPI) has unveiled a 550 million yuan (HK$517 million) acquisition of stakes in three power plants from its parent China Huaneng Group.

HPI, China's largest independent power producer, will buy a 55 per cent stake in the Qinbei plant in Henan province, a 60 per cent stake in the Yushe plant in Shanxi province and 100 per cent of the Xindian plant in Shandong province.

The acquisitions will increase the company's net installed capacity by 770 megawatts (MW), or 5.2 per cent, from 14,780 MW to 15,550 MW, and raise its net installed capacity under construction by 1,020 MW.

The plants are now managed by HPI on behalf of its parent.

The Qinbei plant has a total planned capacity of 3,600 MW. The first phases of two 600 MW units are under construction and due to be completed next year and 2005.

The first-phase investment is 4.68 billion yuan, of which 20 per cent will be funded by shareholders. HPI will contribute about 420 million yuan to this after the deal has been completed.

The Yushe plant has a planned capacity of 1,800 MW. Two 100 MW gas-fired units are in operation. Phase two will comprise two 300 MW coal-fired units due for completion next year.

HPI will need to contribute about 310 million yuan to the 2.69 billion yuan phase-two investment.

The Xindian plant has 600 MW of installed capacity, of which 200 MW of oil-fuelled units will be closed due to a rise in fuel costs.

Qinbei posted a net loss of 20 million yuan last year, compared with a loss of 23 million yuan in 2001, under international accounting standards.

Yushe's net profit rose from 18 million yuan to 38 million yuan over the same period, while Xindian lost 41 million yuan in 2001 but made a profit of 45 million yuan last year.

The average on-grid tariff of the Yushe units in operation is 329.20 yuan per megawatt-hour, while that of Xindian's first phase is 343.70 yuan and the second phase is 320.70 yuan, which are relatively high.

UBS Warburg analyst Alice Hui said the overall acquisition price was fair, given that the operating units were not new. She estimated the average acquisition price per megawatt to be 2.75 million yuan, compared with four to five million yuan for new-build units.