Shandong International Power Development (SIPD), whose H-share flotation was scrapped in 1994 and delayed again last year, is gearing up for a share sale to raise about three billion yuan (about HK$2.79 billion). The plan is expected to be pushed forward at a hearing this month with the Hong Kong Stock Exchange listing committee. Its planned flotation comes after Wuhan Steel Processing aborted an H-share issue to raise about US$150 million, due to poor investor response. It is understood SIPD intends to use the proceeds to fund new projects, including its 45 per cent-owned Laicheng Power Plant, in Laiwu city, which will begin construction this year. The plant, costing about three billion yuan, will have a designed capacity of 1,200 megawatts. It is also conducting preparation work for Jiezhuang Power Plant, with a maximum capacity of 2,400MW. SIPD has operating capacity of 3,625MW from its Shiliquan and Zouxian power plants, almost double the 1,825MW in 1994. It is larger than its competitor - Shandong Huaneng Power Development - which owns four power plants in the Shandong province with installed capacity of 1,575 MW, or 10.6 per cent of the province's total installed capacity. SIPD secured a tariff rise at the end of last year, enabling it to ensure a 13 per cent return this year. To relieve pressure on tariffs, it plans to achieve 14 per cent return next year and 15 per cent in 2000. SIPD and Shandong Huaneng sell the electricity to Shandong Electric Power Co, which operates the Shandong power grid and is the major shareholder of SIPD. One of SIPD's original joint-sponsors, Peregrine Capital, has been replaced by Morgan Stanley, which will co-ordinate the offering alongside Goldman Sachs. SIPD cancelled its three billion yuan flotation in 1994 due to a poor response from international investors to other mainland power stocks - New York-listed Shandong Huaneng and Huaneng Power International. Investors shied away from the stocks on fears the firms would not be able to meet forecast rates of return. At the time, Beijing was keeping tight control on tariff rises to curb rampant inflation.