China Shenhua Energy, the listed unit of the nation’s largest coal miner and one of the largest power producers, has delayed construction on more than 80 per cent of its coal-fired plants after Beijing ordered local governments to stop approving new plants and required producers to slow the development pace on projects already approved. The policy would help improve worsening decline in coal-fired plants’ utilisation in the past two years amid surging new capacity addition and a rapid decline in power demand growth as China shifts its economic growth focus from heavy industry and fixed assets investments to consumption and services. “[Beijing] has recently issued a directive to slow the scale and pace of new coal-fired plants construction,” chairman Zhang Yuzhuo told reporters on Tuesday.“This would help restore demand and supply balance.” The policy bans new approvals in nine provinces, autonomous regions and large municipalities and postpones new approvals in 13 others, according to a Citi report. For projects already approved, construction will be pushed to next year or later in 15 regions, and where work has already started, completion will be postponed. “According to the National Energy Administration, China needs to add no more than 190 giga-watt (GW) [of new coal-fired plants in the five year to 2020], while the country has 300GW of capacity either under construction or pending approval,” wrote Citi head of Asia utilities research Pierre Lau, adding that he estimated that some 20 per cent the nation’s total installed capacity is in excess. The nation had 990GW of coal-fired capacity at the end of last year, whose average utilisation totalled 4,329 hours last year, down 8.7 per cent from 2014 to the lowest since 1978. China Shenhua is reassessing the completion schedule of 10GW of coal-fired plants under construction and the timetable for another 12GW of plants that have received approvals but are not yet built, said president Han Jianguo. “Over 80 per cent of our power plants under construction will be slowed down, and we have no new coal mining projects going ahead,” he said. Han added that three plants that generate heat, cooling and power with 70 per cent energy conversion efficiency will still go ahead. China Shenhua on Thursday posted a 55 per cent fall in net profit to 17.65 billion yuan (HK$21 billion), with all divisions – including railways, ports, shipping and coal chemicals – posting lower profits. Over 80 per cent of our power plants under construction will be slowed down Han Jianguo, China Shenhau president The coal segment saw the steepest 77 per cent fall in pre-tax profit to 5.88 billion yuan, hit by a 16.6 per cent decline in average selling prices, an 8.4 per cent decrease in output and 3.08 billion yuan of asset impairment losses as sharp falls in coal prices meant fewer resources and plants were economically viable. Profits from the power segment slid 9.6 per cent to 17.63 billion yuan as lower coal costs could not be offset by 1.82 billion yuan of asset write-downs and a 11 per cent drop in plant utilisation hours, which meant more fixed costs like depreciation and maintenance needed to be allocated to each unit of sales. The firm has set a target for coal output to be flat at 280 million tonnes this year, while coal sales – including that sourced from third parties – to fall 8.2 per cent to 340 million tonnes. Power output is expected to be 0.5 per cent higher than last year. China Shenhua has slashed this year’s capital expenditure to maintain or expand production capacity by 44 per cent to 20 billion yuan. Some 8 billion yuan of the first batch of 10 billion yuan in spending has been earmarked for upgrading existing plants to meet more stringent pollution control standards and for finishing others that have already started construction. China Shenhua’s share price slid 2.3 per cent on Tuesday to close at HK$12.16. The benchmark Hang Seng Index ended flat.