Datang takes controlling stake in fifth hydro plant
Datang International Power Generation will take a majority stake in a five billion yuan hydropower project, confirming the company's status as the most aggressive hydropower investor among the mainland's three Hong Kong-listed independent power producers.
The deal is Datang's fifth investment in the nascent sector, which accounted for only 5 per cent of national energy consumption last year.
The company yesterday announced it would take a 51 per cent stake in the 600-megawatt Yinpan power plant, which is to be situated in Chongqing along the lower reaches of the Wujiang river.
Datang is also mulling over a separate investment in the smaller, 350MW Baima plant, also to be built on the Wujiang. According to a Datang spokesman, project planning for both plants is still at a preliminary stage with no firm construction timetables set.
The central government has been encouraging power firms to invest in the hydro sector as part of its efforts to reduce pollution produced by coal-fired plants.
It has proposed requiring power firms to produce at least 5 per cent of their power from renewable energy sources - including hydro, wind, bio-mass and solar - by 2010, and raising the requirement to 10 per cent by 2020. It has also offered tax incentives to support hydro projects.
Datang's only operating hydro project is the 20MW Fengning project in Hebei province, in which it has a 90 per cent stake. But it is in the process of building two hydro projects in Yunnan province with a capacity of 1,690.5MW. Both are scheduled for completion by 2007.
The company has also received approval to build the 11.3 billion yuan, 1,750MW Pengshui hydro project in Chongqing. It has a 40 per cent stake in that project, with completion expected in 2007-08.
Datang's spokesman said hydro projects should account for 20 to 30 per cent of its total assets in three to five years.
According to company management, construction costs for hydro projects are 50 per cent more expensive than for coal-fired projects, but unit costs can be 80 per cent cheaper.
