Datang International Power Generation Co Ltd, the second-largest electricity producer in China, has received government approval to build three power plants in the coastal region and obtained a 28-per-cent stake in a coal mine to secure supplies for the plants.

The Hong Kong-listed company said on Tuesday that the National Development and Reform Commission, the country's policy-making body, had given the green light for the construction of three coal-fired power plants in Zhejiang, Guangdong and Fujian provinces.

Three joint ventures will be set up with Datang International holding a majority stake and the rest controlled by local energy and investment companies.

The plants will involve a combined investment of 21 billion yuan (US$2.6 billion) and have a total installed capacity of some 4,800 megawatts (MW), Datang International said.

At the same time, the company has paid some 250 million yuan (US$30.8 million) for a 28-per-cent stake of a coal mine owned by Shanxi-based Datong Coal Group, one of China's largest coal producers.

The mine, which is still under development, will be able to supply 10 million tons to the power plants when they are built within a few years, according to the agreement between the two energy groups.

"We have created a smooth chain covering both the upstream and downstream sectors of power generation," said Yang Hongming, vice-president of Datang International, at a power conference earlier this month in Beijing.

The power producer has vowed to develop its business presence beyond northern China, where most of its plants are located.

Besides focusing on coal-rich regions such as Shanxi and Inner Mongolia for easier access to fuel supplies, the company also plans to create a niche in the western regions where preferential policies have been announced to facilitate major investment, as well as in the coastal regions where consumers have stronger purchasing power, according to the vice-president.

"We cannot put all our eggs in one basket," Yang explained. "By stretching our plant alignment across the country, we aim to reduce the market risks if one area suffers from a supply surplus."

The Datang Wushashan Power Plant Phase-I project in east China's Zhejiang Province, of which 51 percent is owned by Datang International, is the largest of the three. It needs a total investment of 9.449 billion yuan (US$1.16 billion), and has an installed capacity of 2,400 megawatts comprising four 600-MW coal-fired units. Construction of the Zhejiang plant is scheduled to start by the end of this year.

The two plants in South China's Guangdong and Fujian are 75 percent and 55 percent owned by Datang International respectively, and the investment stands at 5.953 billion yuan (US$734 million) and 5.48 billion yuan (US$676 million). Each of the two plants has two 600-MW units.

The Beijing-based independent power producer said it currently has a total installed capacity of 11,210 MW.

Datang shares ended unchanged at HK$5.80 in Hong Kong yesterday while the benchmark Hang Seng Index fell 0.7 percent to 14874.

(China Daily August 25, 2005)