Expansion of power firms banned after dam violations

PUBLISHED : Friday, 12 June, 2009, 12:00am
UPDATED : Friday, 12 June, 2009, 12:00am

Environmental authorities issued a ban on the expansion of the mainland's two biggest power companies yesterday, vowing that the environment would not be sacrificed for economic growth, even during a global economic crisis.

Also banned is the construction of hydropower stations in the middle reaches of the Jinsha (Yangtze) River in Yunnan province and steel factories in Shandong .

The announcement yesterday on the website of the Ministry of Environmental Protection said it would no longer process applications for environmental evaluations submitted by China Huaneng Group, the country's biggest power producer, and China Huadian Group, also a major power generator - except those contributing to new forms of energy generation or environmental protection.

Combined, the two companies generated nearly 20 per cent of the mainland's total electricity production last year.

The decision was prompted by serious violations of environmental regulations, the statement said. It accused Huaneng of damming the Jinsha River in January, without ministry approval, to build its Longkaikou hydropower plant. In the same month, Huadian dammed the Jinsha to build its Ludila hydropower plant, also without approval. Both companies had breached the law and damaged the area's fragile ecology, it said.

In addition, Huaneng deviated from its original design in the construction of one of its biggest coal-fired plants in Inner Mongolia, using water rather than air to cool its generators, without regard for the dwindling water supply in the arid region.

The expansion of the Shandong iron and steel industry was stopped because the Rizhao Steel Company and the Weifang Steel Company had expanded their production lines without environmental officials' approval, using methods and equipment that were outdated, energy intensive and heavily polluting.

Ministry spokesman Tao Detian said hydropower projects would ruin the ecology and economy of a community without proper facilities, design or management to deal with those issues.

'The illegal construction of Huaneng and Huadian's hydropower plants has had an extremely bad impact on the environment,' he said.

The ministry needed to carry out further studies on the environmental impact of hydropower plants in the Jinsha's middle reaches and review the projects that had been approved in the past few years, he said.

Until the results showed that hydropower plants' impact on the environment, such as fisheries, could be minimised, the ministry would stop approving new projects.

A Huadian press officer said 'this is certainly a drawback to our company's operations'.

The share prices of all listed companies in which the Huadian Group holds equity fell yesterday, although the price falls were small, in a range of 0.23 to 1.91 per cent.

The Huaneng Group was not available for comment, but prices in shares of the group's listed arms also dropped.