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Denise Tsang

Power utility CLP Holdings has signed a letter of intent to invest in two plants in Yunnan province.

The non-legally binding agreement marked the beginning of a feasibility study of the power plants in Dian Dong and Yang Zonghai, said a spokesman at CLP Power China, the company's mainland investment arm.

Yunnan deputy mayor Shao Qiwei yesterday was reported as saying in a Chinese-language newspaper that CLP would acquire 80 per cent of Dian Dong power plant and 33 per cent of Yang Zonghai power plant.

Mr Shao was also reported as saying CLP and Yunnan planned to sign a formal agreement next month, with Dian Dong power plant's total investment amounting to 4.7 billion yuan (about HK$4.4 billion).

The spokesman said: 'All I can say is we have signed a letter of intent on two coal-fired power plant projects with . . . Yunnan . . . which serves as a starting point for a feasibility study to be conducted on those business opportunities.'

JP Morgan said Dian Dong was a greenfield project and Yang Zonghai was in operation.

'Negotiations for these projects are very preliminary as the relevant feasibility studies have yet to begin. We believe it will take at least a year before they are formally secured by CLP Holdings,' JP Morgan said.

Dian Dong's capacity is understood to be 1,200 megawatts and Yang Zonghai's 400MW.

The potential investment in Yunnan will add exposure to CLP's focus on northeast China.

An analyst said this would raise the company's risk profile as western China was relatively poorer.



CLP Holdings signs letter of intent on Yunnan power plants