CLP Holdings faces further setbacks in its overseas investment portfolio, with its Yallourn power plant in Victoria, Australia, teetering on the verge of a shutdown in the face of an escalating labour dispute. Mine maintenance workers have been on strike since Monday after Yallourn management and workers failed to reach an understanding on the issue of forced redundancies. The strike, combined with shrinking coal supplies, has led to a decrease in electricity output during the hot Australian summer, when demand for electricity is at a peak. The Yallourn power plant, in which CLP bought a 74 per cent stake last year from Britain's PowerGen, is CLP's largest operating power-generation asset in terms of capacity outside Hong Kong and China. The power plant was also the culprit behind CLP's interim loss of HK$123 million in the Asia-Pacific region. A Yallourn spokesman said the strike and limited fuel supply had led to a sharp drop in generation from 1,450 megawatts to about 800 MW yesterday. 'We've had breakdowns, no coal is being mined. We've got about eight to 10 hours of coal and once that runs down, the units will be shut down, and to re-start them takes four days,' he told Reuters. John Tang Ho-pa, CLP group public affairs manager, said: 'We stand firmly behind the Yallourn Energy management in its effort to resolve this dispute and we hope to see an early resolution through the appropriate statutory means in Australia.' He declined to comment on what possible impact the Yallourn saga would have on CLP. A meeting has been scheduled for this morning between Yallourn, the worker's union and the government's industrial relations commission in the hope of reaching an understanding. The dispute marks a fresh round in a three-year rift, which caused Yallourn to shut down for one month last year, and a day of power blackouts. Yallourn is one of the largest power plants in Victoria, controlling about 22 per cent of the market. The power plant operates a 'just-in-time' coal supply, which will lead to supplies running out in 12 hours if there is a problem with the delivery system from the adjoining open-cut mine that striking maintenance workers do not fix,' an analyst said. 'The situation doesn't look good for CLP.' Lehman Brothers analyst Angello Chan said making the situation worse was declining pool prices, which were estimated to have slumped an average of 16 per cent for the five months to the end of last month from the same period last year. This, in turn, cut the tariff for Yallourn's electricity contracts and effectively eroded profit margins. A large number of cheaply-priced contracts inherited from PowerGen's regime was a key factor in Yallourn's losses in the first half of this year. In August, CLP directors expressed optimism about a turnaround for the power plant by the first half of next year as a large number of renewed contracts with higher tariffs would flow in. Some analysts estimated the power plant would report bigger losses this year and next year should the industrial action and the declining on-grid tariffs persist. Mr Chan said Yallourn's loss would balloon to HK$200 million this year. He added that next year's loss could reach anywhere between HK$250 million and HK$300 million if pool prices continued to sink and the strike spilled over to next year.