Huaneng aims to generate 60 per cent more electricity from power plants along new Silk Road
China Huaneng Group, the nation’s largest power producer, said it’s planning to increase its overseas
generation capacity by 60 per cent in three years, with a substantial portion in nations covered by China’s Belt and Road Initiative, according to the chief of its Hong Kong unit.
While expansion in emerging markets along Chinese president Xi Jinping’s new Silk Road initiative can be rewarding, it’s also a challenging journey, China Hua Neng Group Hong Kong general manager Chen Xi said during a Monday summit in Hong Kong on the infrastructure plan.
“This year has been a harvesting year for Huaneng in the belt and road nations,” he said. “But we have faced plenty of challenges and difficulties.”
Huaneng is the state-owned parent of Hong Kong and Shanghai listed Huaneng Power International, which owns some of the most efficient plants of the group.
China Huaneng, which has global generating capacity of 160 gigawatt (GW) - roughly a 10th of China’s total, has invested in plants overseas with combined annual generating capacity of 10GW since it was set up over three decades ago.
It aims to raise it to 16GW by 2020, Chen said, adding it has commissioned 1.32GW of coal-fired plants in Pakistan mid this year, filling a quarter of the nation’s power supply gap.
Before the year’s end, it plans to commission a 0.4GW hydro power project in Cambodia.
It also has planned projects and those under construction in Myanmar, Singapore and Australia.
Chen said project financing and unforeseen circumstances are some of the tough tasks his company - a platform to fund such projects - have faced.
“Given the economies, business environment and legal systems are different, and sometimes undeveloped in these nations, international, and even Chinese financial institutions have imposed tougher requirements - such as financial guarantee by our parent company - before they will lend,” he said.
In some countries, political events organised by regional or international non-government organisations have also cost us delays, which is bad for both the investor and local economic development, he added without elaborating on the events.
According to a Myanmar Times report in 2015, preliminary agreements on some 11 coal-fired power plants were signed between the government and local and international firms in 2010, but none went ahead due to opposition from civil society groups citing social and environmental concerns.
Myanmar has the lowest electricity generation capacity in Southeast Asia.
To mitigate risks, Chen said project developers in emerging markets should consider seeking project finance insurance from policy bank such as the Export-Import Bank of China, and invest with local and international partners to share risks and expertise.
“One should also try to secure power purchase agreements with the support of the local government so as to obtain some form of revenue guarantee,” he added.