Huadian Power International Co Ltd (HDPI), China's third-largest power producer listed in Hong Kong, said it will acquire two power plants from its parent China Huadian Corp for 165 million yuan (US$19.9 million) to expand business across the nation.

The company will buy 97 percent of Huadian Suzhou Power Generation Co Ltd in the eastern province of Anhui for 74.9 million yuan (US$9 million) and 90 percent of Huadian Xinxiang Power Generation Co Ltd in Henan Province for 90.1 million yuan (US$10.9 million), HDPI said on Tuesday.

The Shandong-based HDPI, through the acquisitions, is expanding its business presence beyond its home base to cash in on the soaring demand for power in the world's fastest-growing major economy.

Both deals, the company said, have underlined the power producer's strategic plan to drive business in the domestic market outside Shandong, which has been "the company's core operating centre."

The move also reflects the support of HDPI's controlling shareholder China Power Corp - owning 50.01 percent of HDPI's shares - to develop the Hong Kong-listed utility into a "national electricity-generating company," it said.

China faces a third year of power shortages and may have some 25,000 megawatts of electricity-generating capacity less than it needs when demand peaks during the summer, Shi Yubo, vice-chairman of the State Electricity Regulatory Commission, said earlier last month.

Insufficient power supply in the first quarter led to brownouts in up to 26 provinces across the nation, compared to 24 last year - although the situation has mitigated to some extent this year.

With a registered capital of 55 million yuan (US$6.6 million), the Suzhou company in Anhui Province was established in 2003, and its two 600-megawatt generating units are still under construction, scheduled to supply electricity to local consumers in the province by 2007.

The power company in Xinxiang of Henan Province was registered for 69 million yuan (US$8.3 million) also in 2003, and has not generated power. Two 600-megawatt units and two 300-megawatt units have yet to complete construction at the plant, which are due to go online by 2006 and 2007.

The Xinxiang plant, upon operation, will target consumers within the local Henan Province, the statement said.

The Shandong-based power producer generated 30.94 percent more electricity year-on-year to reach 11.78 billion kilowatt-hour in the first quarter, collecting revenue of 3.29 billion yuan (US$398 million) and gaining profit of 232 million yuan (US$28 million).

The company is adding capacity to its existing power plants in the electricity-hungry regions of Shandong, Anhui and Ningxia to meet surging power demand.

Another two 1-gigawatt coal-fired generating units are being added to the existing 2,505 megawatts of installed capacity at its Zouxian power plant in Shandong, which will make the plant the largest coal-fired power facility in China by 2007.

(China Daily June 16, 2005)