China Shenhua Energy, the listed unit of the nation's largest coal producer Shenhua Group Corp, plans to acquire from its parent company 3,500 megawatts of "near-zero emission" coal-fired power plants as part of a five-year asset acquisition programme. The plan, to be funded by a share sale on the mainland, would not result in lower profitability of its power generation business, vice-chairman Ling Wen said. "To meet stricter emission regulations, we must invest in upgrading our plants, but this does not mean our profitability will be hit in a major way," Ling said. "On the contrary, our power plants will get priority when selling their output to state-owned power grid operators." Senior vice-president Wang Xiaolin said each of the near-zero emission coal-fired plants' upgrade cost would run into tens of millions of yuan, depending on their size and technology used. Our plants will get priority when selling … to state-owned grid operators LING WEN, CHINA SHENHUA ENERGY "Near-zero" indicates an emission level lower than that of power plants fired by natural gas. All of Shenhua's new coal-fired plants will need to meet such standards and all existing ones will be gradually upgraded. Wang would not give a timetable or budget. The construction cost of conventional coal-fired plants is about 4 million yuan (HK$5 million) per megawatt, which means the acquisition is likely to exceed 14 billion yuan. The acquisition is part of a five-year plan for Shenhua to buy 14 assets from its parent company, spanning coal mining, power generation and coal-to-oil and coal-to-chemical projects. Shenhua on Sunday reported a 10 per cent drop in net profit to 22.78 billion yuan for the first half, with increased earnings from power generation and coal logistics largely offsetting a 24 per cent plunge in gains from coal mining. In view of industry oversupply, weak demand and falling coal prices, Shenhua cut this year's targets for coal sales by 13.7 per cent to 444.4 million tonnes and coal output by 4 per cent to 305.4 million tonnes. The revenue target has been reduced by 10.4 per cent to 245.7 billion yuan, but the cost of sales is aimed to be lowered by a steeper 12.9 per cent to 181 billion yuan. Shenhua's shares dropped 1.85 per cent to close at 14.87 yuan in Shanghai yesterday. In Hong Kong, the stock ended 3.01 per cent lower at HK$22.55.