United States-based energy company AEI has bought a 50 per cent stake in a power plant in Henan province, a rare deal in the mainland's profit-challenged power sector.
AEI said yesterday that it had bought the stake in the 270-megawatt cogeneration power plant, Luoyang Sunshine Cogeneration, which produces electricity and heat in Luoyang, as part of its foray into the mainland's electricity market.
The plant, with two 135MW steam turbine generators, solely supplies steam and heat to industrial and residential users in Luoyang New District, a cluster of city government offices, an industrial zone and a town centre.
AEI Asia chief executive Colin Tam said in a statement that the deal marked the Houston firm's first power-generation investment on the mainland, paving the way for more acquisitions.
Other shareholders of the project are local investors Luoyang Hailong Power Investment and Consultancy with a 33 per cent stake, and Luoyang City Gas General Co with a 17 per cent stake.
Intrigued at the timing of the deal, one analyst said the word 'acquisition' was rare in the electricity market. Power producers generally have suffered squeezed profit margins, and some have even slipped into losses as a result of the stubbornly high costs of coal and gas, and the state's policy of restricting tariff adjustments.