The Yunnan provincial government has granted special tax concessions for three hydropower projects backed by Beijing Datang Power Generation, company officials said yesterday. The concessions come though the central government has said it would stamp out preferential tax policies granted by local governments to encourage investment. Beijing Datang - one of China's largest independent power producers - revealed the concessions yesterday as it sought to allay concerns over the profitability of the three plants. Executive director Yang Hongming said the plants would have an estimated return of 12 per cent - higher than the 10 per cent considered necessary for the projects to be viable. The high return is due in part to a two-year tax holiday granted by Yunnan provincial government. It would also enjoy a 50 per cent reduction in taxes for three years. The projects would effectively pay taxes at a rate of just 7.5 per cent for three years starting from the third year and 15 per cent thereafter. Mr Yang dismissed concerns the projects would be affected by Beijing's recent announcement that it would clamp down on tax concessions granted by local governments. 'The [tax concessions] were endorsed by Beijing,' he said. Meanwhile, China is expected to unveil a detailed power reform plan soon to break up giant State Power Corp's near monopoly by setting up five generators and two grid corporations, according to a Reuters report. The five independent generators would include Huaneng Group, parent of Huaneng Power; Datang Group, parent of Beijing Datang Power Generation; and Shandong International Power Group, parent of Shandong International Power Development. Guodian Power Group, parent of SP Power and China Power International, a subsidiary of State Power Corp, would also be among the generation firms. Under the power grid reform, State Power Grid would be charged with setting up five companies to operate separate grids in the north, northeast, northwest, east and middle parts of China.