CLP Holdings, Hong Kong's largest power utility, is spending 5.2 billion yuan (US$628 million) to build a power plant in South China.

"We held the ceremony yesterday (on Sunday)" Marcella Chui, CLP's spokeswoman told China Daily yesterday, "and the construction has started today or will commence in the coming few days."

After getting approval from the National Development and Reform Commission (NDRC) in March, the independent power company will construct two 600-megawatt coal-fired generators in Fangchenggang, a port city of Guangxi Autonomous Region of South China.

A government official surnamed Liu from the Guangxi Development and Reform Commission confirmed the project yesterday in an interview.

The first generator is scheduled to be operational by the third quarter of 2007, and the second will be supplying power by the end of March 2008, she said.

The Hong Kong-based power plant builder has set up a joint venture with the Guangxi Electric Power Company Ltd for the project. CLP is taking a 70 per cent stake with the remaining 30 per cent going to the local company in Guangxi.

The power plant will initially target local electricity users in the autonomous region, Chui said.

"As far as the information that I have on hand, this is the only project we will build this year in the Chinese mainland, and it is our first project in Guangxi," said Chui.

"We have no other concrete plans for business expansion in the mainland market."

According to the spokeswoman, the two generators are only the first-phase construction of the whole project, which will have a generation capacity of some 2,400 megawatts.

Details for the second-phase project have yet to be worked out, she said.

Although surging demand for electricity in the world's fastest growing economy has provided opportunities for power companies, the government's tight control and complicated approval procedures have scared away many overseas market players.

However, foreign presence could grow over the next few years as conditions render overseas companies' entry into the power generation market more manageable, said Weiming Eric Shi, CEO of Hong Kong based Senergy International Ltd.

In the first quarter of this year, a total of 26 provinces suffered from brownouts.Economically developed areas in East and South China have been by hardest-hit by power shortages, industry sources said.

In a move to overcome a saturated Hong Kong market, the 104-year-old CLP is increasing investment in Australia and the Chinese mainland.

The power utility has built a total of 8 coal-fired and 9 hydro power plants across the country.

It is nearing an acquisition of 2.1 billion Australian dollars (US$1.6 billion) to buy the merchant energy business division of SPI Australia Group, a wholly-owned subsidiary of Singapore Power, said Chui.

(China Daily May 31, 2005)