Power Industry Faces Capital Withdrawal

AES plans to sell off its Chinese assets as a whole and quit the Chinese market its

common industry knowledge, said Lin Boqiang, director of the Center of China Energy Economics Research at Xiamen University. Other power companies that arrived at the same time have all gone already AES fought on for longest, the government should give it a medal. If AES does go, it will leave Frances EDF as the only foreign power company operating in China, where it focuses on nuclear power. Even before China joined the World Trade Organisation (WTO) in 2001, its thermal power sector was open to foreign firms. In 1993, AES became the first US power company to land on Chinese shores. At that time, it operated mainly through joint ventures with local or national power companies, building power plants and signing contracts with customers that specified minimum electricity purchases. Back then, Chinas power markets were short of capacity, money and technology innovation in mining industry like jaw crusher and there was a grave lack of investment. Provinces including Shandong, Fujian and Guangdong offered guaranteed sales and prices, and pulled in foreign investors with promised fixed rate returns of up to 15%, even 20%. Investors flocked in, and by the end of 1998 there were as many as 39 foreign power companies operating in China. According to the State Power Economic Research Institute, foreign-backed plants accounted for 14.5% of total capacity at their peak. An insider from the China Electricity Council recalled that, while state regulations of the time mandated a period of three years to build a 600 megawatt thermal power plant, many projects were up and running within just 20 months. One day earlier was one day richer, the source said. But by 1998, the flood of foreign investment had caused a significant electricity surplus and government policy shifted from encouragement to restraint. Following orders from the National Development and Reform Commission (NDRC), Chinas top economic planner, local governments started doing away with their policies on guaranteed returns, while generating hours and purchase prices specified in the original joint-venture contracts were no longer guaranteed. As one journalist put it: China is rolling up the red carpet for foreign power companies. mobile crusher:http://www.hxjqchina.com/product-list_21.html cone crushers:http://www.hxjq-crusher.com/8.html How are you going to get that 15% rate of return? You need to be generating electricity for 5,500 hours a year, explained the source from the China Electricity Council. Around the year 2000, in many places the electricity generated was too low to satisfy the original agreements. Some foreign companies went to court, but in the end most got nowhere. On January 5, 2005, Siemens announced plans to sell a 40% stake in Hebei Hanfeng Power Plant, along with stakes in 16 other power plants. In March, Constellation Energy split off from its Chinese operations. By 2004, foreign energy companies accounted for just 5% of fixed asset ownership in the sector. The NDRC made a second attempt to link coal and power prices, ruling that when the price of coal for power generating has risen by 5% or more in the last six months, grid power prices will be adjusted six months later. But there was a condition: the power companies would have to absorb 30% of the increase. Weve never seen anything like it anywhere in the world, complained Peak Pacific chief executive Anderson. But not all power companies have been victims of pricing mechanims. For coal, China has a dual system: the market-economy and the planned economy. Only state-owned power plants have access to planned-economy coal, and coal mines struggle to fulfil contracts. Private and foreign companies are left purchasing fuel on the open market.As the professional manufacturer of complete sets of mining machinery, such as jaw crushers, Henan Hongxing is always doing the best in products and service.

by: chris lee

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