Asia Power to buy hydro, wind plants in China

Power plant operator Asia Power Corp. Ltd. plans to buy one or two renewable energy plants in China every year, banking on the country’s drive to curb growing pollution.

The plants either would be hydro or wind powered, Asia Power Vice President Tian Aimin said. Since its founding in 1997, the company has snapped up stakes in eight plants across China — five hydropower plants and three coal-fired plants — with total capacity of 738 MW.

“Our investment strategy is to acquire power plants that are already running,” Tian said, adding that buying and running existing plants rather than building new ones was more profitable. “Within three to five years, we hope our power generation can be more than 1,000 MW.”

The firm would take a controlling stake in joint ventures and fund the acquisitions using its cash reserves, bank loans, or funds raised from the sale of shares, Tian said.

Hydropower plants have lower operating costs, requiring only one-fifth of the manpower needed to run a coal-fired plant, Tian said, adding that a hydro plant does not have to buy fuel.

Tian said Asia Power also is in talks to buy one or two wind plants in the provinces of Heilongjiang and Xinjiang and might conclude those deals by the end of this year.

China has come under increasing pressure by the international community to rein in environmental pollution in many of its industries. The government said in March it would raise renewable energy to 10 percent of total energy use by 2010, even as it continues to rely on coal for most of its energy needs.

As Asia Power shifts its focus to develop renewable energy, Tian said that the firm plans to sell two of its coal-fired power plants — potentially worth about 400 million renminbi (US$52 million) — within the next two years.

Tian said Asia Power does not plan to expand abroad because it wants to capitalize on the rising need for energy in Asia’s fastest-growing economy.

“Currently we still see a lot of opportunities to invest in China, so there’s no need for us to go out,” Tian said. “We are only limited by our size, so what we need is more funds to expand into the China market.”

With a stock market value of US$88 million, Asia Power is one of the few energy firms listed on the Singapore bourse. In 2006, it nearly doubled net profit to S$19.9 million (US$13.12 million), on the back of the sale of two of its associates. Revenue rose 23.6 percent to S$98.1 million due to sales from its newest hydropower plant.

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