Source:
https://scmp.com/article/546757/china-power-forecasts-higher-costs

China Power forecasts higher costs

Firm expects to pay extra 20m yuan on planned borrowings

China's decision to raise interest rates to cool economic growth will increase costs for China Power International Development, one of the country's largest independent power producers, says executive vice-president Hu Jiandong.

The firm expected to incur extra costs of about 20 million yuan on planned borrowings of three billion yuan after the country's one-year lending rate was raised 27 basis points to 5.85 per cent, he said. The H-share company, headed by former premier Li Peng's daughter, Li Xiaolin, planned to borrow three billion yuan this year to finance new projects.

The rate rise came two days after the country launched a fresh round of macroeconomic measures to curb direct investment in heavy industries such as cement, aluminium and basic raw materials.

Some analysts said the moves would also cool the heavy demand and consumption of electricity by cement, aluminium and steel manufacturers.

'The macroeconomic measures that were implemented last year are a healthy policy to keep the country's long-term economic growth in an orderly manner,' Mr Hu said after China Power's annual shareholder meeting yesterday. 'Demand for electricity will be affected but the impact should be mild.'

China Power forecast a 5 per cent fall in the utilisation rate of its generation units this year, after a 2.7 per cent decline last year, and a 5 per cent rise in average coal cost this year, he said.

Mr Hu declined to comment on the plan of China Power's state-owned parent, China Power International Holdings, to break into Hong Kong's electricity market.

Ms Li, who is China Power chief executive and the parent company's president, is the spokeswoman for the expansion plan but she was absent from the shareholder meeting.