THE mainland is running the risk of losing vital investment in power projects to other countries in the region if it continues to cap the rates of return to foreign investors.
Lewis Preston, president of the World Bank, said with the vast capital flows into Asia and the exciting growth prospects of several of China's neighbours, regional countries may prove more worthwhile prospects.
'If they [China] want private capital to do the job, I suspect that they will have to offer returns that are maybe slightly more generous than the current terms.' At present, China has a 15 to 18 per cent cap on the potential rate of return that can be achieved by foreign investment in power projects.
China's energy authorities had, however, insisted that this cap was not a fixed national policy and that it was really up to individual provinces to negotiate the rates with foreign investors.
Several European power project companies had already expressed concern over the cap, most notably Percy Barnevik, president and chief executive officer of Europe's largest electrical engineering firm, Asea Brown Boveri.
Mr Preston said he believed that one of the reasons for the mainland authorities imposing the cap was an attempt to halt escalating inflation in the coastal cities.
