China's largest independent electricity provider, Huaneng Power (NYSE:HNP), announced an increase of on-grid tariffs by Yuan22.51/MWh or 5.7% as of August 20, 2008. This increase is the second in 2008 aimed at compensating for high coal prices. China is potentially facing one of the worst power shortages in years, similar to 2004, when brown outs were rampant. The government has just ordered coal exporters to cut back on exports - so far it was an oral note. The fact of the matter is that since coal prices has been capped to keep prices low domestically, Chinese coal miners preferred to sell coal on the spot market instead. The result is low coal inventory level at power producers, potentially threatening stable power supply.
The latest increase of on-grid power prices is on top of the previous increase of 5.5% this year, a compounded increase of 12.4%, far below the average coal price increase of 70%. This leaves power generators in the red, leaving investors with no other option than to desert the sector for now. Huaneng Power (HNP) lost 3.61% in the last three days - related chart here - just to continue the overall bearish trend since the beginning of the year. The stock is down over 30% year to date as the following chart demonstrates.
To read original press release of Huaneng's price increase, please click here.
Huaneng Power International Inc.
(a Sino-foreign joint stock limited company incorporated in the People’s Republic of China)
(Stock Code: 902)
ADJUSTMENTS OF TARIFFS
This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
Huaneng Power International, Inc. (the “Company”) announced the adjustments of tariffs of its power plants. Pursuant to a notice recently issued by the National Development and Reform Commission (the “NDRC”), the NDRC decided to adjust the on-grids tariffs of coal-fired power plants in order to ease the operation difficulties of the enterprises operating coal-fired power plant and to ensure a normal order for their power production and operation.
According to the approved tariff adjustment plan, the average on-grid tariffs (including VAT) of the Company’s coal-fired power plants would be increased by RMB22.51/MWh (approximately an increase by 5.67%). The increase took effect on 20 August 2008.
Pursuant to a document in respect of the tariff adjustments issued by the NDRC, the on-grid tariffs of the Company’s power plants would be adjusted as follows:
Generating Units
On-grid Tariff before Adjustment (RMB/MWh) (VAT Inclusive)
Change (RMB/MWh) (VAT Inclusive)
On-grid Tariff after Adjustment (RMB/MWh) (VAT Inclusive)
Liaoning Province
Dalian Nos. 1~4 341.70 20.00 361.70
Dandong Nos. 1~2 343.50 20.00 363.50
Yingkou
Nos. 1~2 355.50 20.00 375.50
Nos. 3~4 373.80 20.00 393.80
Shanxi Province
Yushe
Nos. 1~2 339.40 20.00 359.40
Nos. 3~4 295.40 20.00 315.30
Hebei Province
Shangan
Nos. 1~2 367.30 20.00 387.30
Nos. 3~4 382.30 20.00 402.30
No. 5 351.80 20.00 371.80
Shandong Province
Dezhou
Nos. 1~2
Nos. 5~6
383.90
25.00
408.90
Nos. 3~4 398.90 25.00 423.90
Weihai Nos. 1~4 423.50 25.00 448.50
Jining
No. 4 372.40 25.00 397.40
Nos. 5~6 388.40 25.00 413.40
Xindian
Nos. 3~4 388.40 25.00 413.40
Nos. 5~6 372.40 25.00 397.40
Jiangsu Province
Nantong
Nos. 1~2 384.50 25.00 409.50
Nos. 3~4 399.50 25.00 424.50
Nanjing Nos. 1~2 384.50 25.00 409.50
Taicang Nos. 1~4 414.00 25.00 439.00
Huaiyin
Nos. 1~2 399.50 25.00 424.50
Nos. 3~6 410.80 25.00 435.80
Jinling Nos. 1~2 520.00 25.00 545.00
Shanghai
Shidongkou I Nos. 1~4 395.60 25.00 420.60
Shidongkou II Nos. 1~2 385.60 25.00 410.60
Fujian Province
Fuzhou Nos. 1~4 409.80 20.00 429.80
Zhejiang Province
Yuhuan Nos. 1~4 440.70 25.00 465.70
Changxing Nos. 4~5 455.50 25.00 480.50
Guangdong Province
Shantou Coal-fired
Nos. 1~2 523.71 25.00 548.71
No. 3 479.20 25.00 504.20
Hunan Province
Yueyang
Nos. 1~2 405.50 20.00 425.50
Nos. 3~4 420.50 20.00 440.50
Jiangxi Province
Jinggangshan Nos. 1~2 393.00 20.00 413.00
Henan Province
Qinbei Nos. 1~4 369.20 25.00 394.20
Chongqing
Luohuang
Nos. 1~4 351.50 15.00 366.50
Nos. 5~6 364.30 15.00 379.30
Gansu Province
Pingliang Nos. 1~4 245.10 15.00 260.10
By Order of the Board
Gu Biquan
Company Secretary
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Page rendered at 1/7/2009 6:29:09 AM (Eastern Standard Time, UTC-05:00)
Disclaimer The opinions expressed herein are my own personal opinions and do not represent my employer's view in anyway.