China Power targets foreign acquisition
China Power International Development, the Hong Kong-listed arm of the mainland's fifth-largest power company, aims to make its first overseas investment in a power project this year.
The company is in talks to invest in coal-fired power plants in Southeast Asia, possibly buying existing plants or building new ones, chief executive Li Xiaolin said.
'We'll focus on the large-scale ones, those with 600 megawatt-generation units or above,' said Ms Li, daughter of former premier Li Peng.
China Power would partner with local companies and hopefully could conclude some projects this year, she said without giving more details such as estimated investment size.
'China, Southeast Asia and India, all are the regions with rapid economic growth which will provide promising development opportunities for us.'
China Power's overseas investment could be the first among all mainland-listed power firms.
Although the firm does not have experience in overseas markets, its parent company bought a 6 per cent stake in Companhia de Electricidade de Macau in 2003 and is planning to supply electricity to Hong Kong through its 50 per cent-owned venture China Hong Kong Power Development.
Despite the planned overseas foray, China Power would not slow its pace of expansion in the mainland, Ms Li said. The company was also interested in a listing in the A-share market but needed to wait until the government released its policy on red chips selling A shares.
'China Power will continue to increase the construction of new plants as well as acquire power assets from our parent company,' she said. One possible target was the 1,200 MW Qinghe Power Plant, operated by the company on behalf of its parent.
China Power would focus on the development of large-scale coal-fired plants while investment in renewable and alternative energy projects would be carried out by either its parent or Oriental Investment Corp, she said.
China Power's parent became the second-largest shareholder of Oriental Investment after a recent share placement deal that gave it a 19.9 per cent stake.
Yesterday, Oriental Investment announced that Ms Li had been appointed chairman and the company was changing its name to China Power New Energy Development to better reflect its current business.
Ms Li replaces Lai Leong, who has stepped aside to become vice-chairman and chief executive.
'We'll support Oriental Investment in the development of renewable energy,' Ms Li said but declined to comment if the group would increase its stake.
China Power's parent plans to invest 24 billion yuan to develop renewable energy projects, mainly in wind power and hydropower, and wants to have a total installed capacity of 2,000 MW of such energy by 2010, 10 per cent of the company's total installed capacity by then.
The cost of building renewable energy power plants is higher, at 8,000 yuan to 10,000 yuan per kilowatt, compared with 4,000 yuan to 6,000 yuan for coal-fired plants.
'The government has offered incentives such as a higher electricity tariff for renewable energy,' Ms Li said.