| Topic: |
Politics > Politics-USA |
| User: |
"Captain Compassion" |
| Date: |
31 Jan 2005 10:13:19 PM |
| Object: |
Foreign power firms leaving China |
Foreign power firms leaving China
UNPROFITABLE: In light of fixed electricity tariffs and skyrocketing
coal prices, many foreign companies say they are pulling out because
they are losing money
AFP , SHANGHAI
Tuesday, Feb 01, 2005,Page 12
China's booming economy has led to a major energy shortage but foreign
power companies are pulling out because they cannot make enough money,
industry managers and analysts said yesterday.
After investing heavily in the sector during the early 1990s, foreign
power companies hit mainly by rising coal prices but fixed electricity
tariffs have been finding China a losing proposition.
"It's a complete disaster. In 2004 coal prices skyrocketed along with
other commodities in China and we got no tariff increase," said Robert
Peterson, chief executive of Power Peak, which operates plants with
total capacity of 400 megawatts.
"You can't make money in China's power sector," Peterson said.
Partially to blame is the fact that the country's five state-owned
power groups are protected by state-allocated prices that allow them
to buy coal much more cheaply.
Foreign firms have to buy coal on the spot market where prices are
much higher.
"Surging coal prices are pressuring power plants' profits," said Luo
Ming, a power industry analyst with Changsheng Fund Management.
"Foreign firms will continue to face the problem for the next two
years. Now is the right time to pull out of China," Luo said.
Although Beijing raised electricity tariffs in January and June last
year, the rise could not offset surging coal prices, up 36.8 percent
year-on-year in the first nine months of last year.
A series of broken contracts by local firms was also to blame for the
sharp fall in foreign fixed asset investment in China's power
industry, forcing firms to slowly withdraw support over the last seven
years, analysts said.
"A lot of companies entered the Asian and Chinese markets in the
beginning of the 90s but had to pull out after 1997 as local contracts
were not honored. A lot of firms' investment returns did not meet
expectations," said Gary Lau, senior vice president of Moody's
Corporate Finance Group.
In the early 1990s as China's economy began to take off, local power
operators in need of funds also teamed up with foreign firms to build
power plants which guaranteed their partners a high investment return.
These build-operate-transfer (BOT) agreements were also coming to an
end.
"Foreign firms must transfer their stakes to the Chinese side once the
contract is over. This was why Siemens sold its stake in Hanfeng
earlier this month," Luo said, referring to the German conglomerate
that sold off its 40 percent investment along with Sweden's
Vattenfall.
Despite the sector's rapid growth, foreign investment is unlikely to
pick up in the near future as long as the price of coal remains high
and while electricity prices are kept artificially low.
"Electricity tariffs are a political issue. If they rise too much, the
population will not be able to pay," Moody's Lau said.
Even though the National Development and Reform Commission, China's
top economic planning organ, last year pegged electricity prices to
fluctuations in coal prices to help ease margin pressure for
producers, doubts remain.
Analysts called into question the rules, set to go into effect this
May, which are meant to transfer up to 70 percent of the increases in
coal prices to consumers.
Lau said the new rules are seen only as guidelines that provincial
governments can interpret as they see fit.
----------------------------------------------------------------------
"Why would I listen to losers?" -- Arnold Schwarzenegger
"Long term commitment in relationships is only necessary because it takes
so damn long to raise children. Marriage may well be some kind of trick
to keep the males around beyond sexual satiation." -- Captain Compassion
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
res0mp8t@NOSPAMverizon.net
.
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| User: "Christopher Benson-Manica" |
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| Title: Re: Foreign power firms leaving China |
31 Jan 2005 11:12:08 PM |
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In talk.politics.misc Captain Compassion <res0mp8t@nospamverizon.net> wrote:
China's booming economy has led to a major energy shortage but foreign
power companies are pulling out because they cannot make enough money,
industry managers and analysts said yesterday.
Maybe that's because investing in coal was a bad idea. Nuclear power,
anyone?
Partially to blame is the fact that the country's five state-owned
power groups are protected by state-allocated prices that allow them
to buy coal much more cheaply.
Or maybe it was because competing with government monopolies is a
tough fight...
In the early 1990s as China's economy began to take off, local power
operators in need of funds also teamed up with foreign firms to build
power plants which guaranteed their partners a high investment return.
These build-operate-transfer (BOT) agreements were also coming to an
end.
Maybe when China's growth short-circuits over power they'll start
getting the clue that Communism can never work.
--
Christopher Benson-Manica | I *should* know what I'm talking about - if I
ataru(at)cyberspace.org | don't, I need to know. Flames welcome.
.
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| User: "Captain Compassion" |
|
| Title: Re: Foreign power firms leaving China |
31 Jan 2005 11:32:20 PM |
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On Tue, 1 Feb 2005 05:12:08 +0000 (UTC), Christopher Benson-Manica
<ataru@nospam.cyberspace.org> wrote:
In talk.politics.misc Captain Compassion <res0mp8t@nospamverizon.net> wrote:
China's booming economy has led to a major energy shortage but foreign
power companies are pulling out because they cannot make enough money,
industry managers and analysts said yesterday.
Maybe that's because investing in coal was a bad idea. Nuclear power,
anyone?
Partially to blame is the fact that the country's five state-owned
power groups are protected by state-allocated prices that allow them
to buy coal much more cheaply.
Or maybe it was because competing with government monopolies is a
tough fight...
In the early 1990s as China's economy began to take off, local power
operators in need of funds also teamed up with foreign firms to build
power plants which guaranteed their partners a high investment return.
These build-operate-transfer (BOT) agreements were also coming to an
end.
Maybe when China's growth short-circuits over power they'll start
getting the clue that Communism can never work.
China is doing the same thing that Grey Davis did in California. If
the cost of power production rises then the cost has to be passed on
to the consumer else you will go broke.
----------------------------------------------------------------------
"Why would I listen to losers?" -- Arnold Schwarzenegger
"Long term commitment in relationships is only necessary because it takes
so damn long to raise children. Marriage may well be some kind of trick
to keep the males around beyond sexual satiation." -- Captain Compassion
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
res0mp8t@NOSPAMverizon.net
.
|
|
|
| User: "Smokin the Demo Crack Pipe" |
|
| Title: Re: Foreign power firms leaving China |
31 Jan 2005 11:46:40 PM |
|
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"Captain Compassion" <res0mp8t@NOSPAMverizon.net> wrote in message
news:pt4uv09ki77dk913snkio7g2et2qmeeuc3@4ax.com...
On Tue, 1 Feb 2005 05:12:08 +0000 (UTC), Christopher Benson-Manica
<ataru@nospam.cyberspace.org> wrote:
In talk.politics.misc Captain Compassion <res0mp8t@nospamverizon.net>
wrote:
China's booming economy has led to a major energy shortage but foreign
power companies are pulling out because they cannot make enough money,
industry managers and analysts said yesterday.
Maybe that's because investing in coal was a bad idea. Nuclear power,
anyone?
Partially to blame is the fact that the country's five state-owned
power groups are protected by state-allocated prices that allow them
to buy coal much more cheaply.
Or maybe it was because competing with government monopolies is a
tough fight...
In the early 1990s as China's economy began to take off, local power
operators in need of funds also teamed up with foreign firms to build
power plants which guaranteed their partners a high investment return.
These build-operate-transfer (BOT) agreements were also coming to an
end.
Maybe when China's growth short-circuits over power they'll start
getting the clue that Communism can never work.
China is doing the same thing that Grey Davis did in California. If
the cost of power production rises then the cost has to be passed on
to the consumer else you will go broke.
I hear that! I mean in CA a 1300 SQ ft Condo in San Diego had a $400 a month
electricity bill...in March. Man that is rediculous.
----------------------------------------------------------------------
"Why would I listen to losers?" -- Arnold Schwarzenegger
"Long term commitment in relationships is only necessary because it takes
so damn long to raise children. Marriage may well be some kind of trick
to keep the males around beyond sexual satiation." -- Captain Compassion
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
res0mp8t@NOSPAMverizon.net
.
|
|
|
| User: "Captain Compassion" |
|
| Title: Re: Foreign power firms leaving China |
01 Feb 2005 12:10:51 AM |
|
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On Tue, 01 Feb 2005 05:46:40 GMT, "Smokin the Demo Crack Pipe"
<Your.Silly.Mom.@Licks.Balls.Com> wrote:
"Captain Compassion" <res0mp8t@NOSPAMverizon.net> wrote in message
news:pt4uv09ki77dk913snkio7g2et2qmeeuc3@4ax.com...
On Tue, 1 Feb 2005 05:12:08 +0000 (UTC), Christopher Benson-Manica
<ataru@nospam.cyberspace.org> wrote:
In talk.politics.misc Captain Compassion <res0mp8t@nospamverizon.net>
wrote:
China's booming economy has led to a major energy shortage but foreign
power companies are pulling out because they cannot make enough money,
industry managers and analysts said yesterday.
Maybe that's because investing in coal was a bad idea. Nuclear power,
anyone?
Partially to blame is the fact that the country's five state-owned
power groups are protected by state-allocated prices that allow them
to buy coal much more cheaply.
Or maybe it was because competing with government monopolies is a
tough fight...
In the early 1990s as China's economy began to take off, local power
operators in need of funds also teamed up with foreign firms to build
power plants which guaranteed their partners a high investment return.
These build-operate-transfer (BOT) agreements were also coming to an
end.
Maybe when China's growth short-circuits over power they'll start
getting the clue that Communism can never work.
China is doing the same thing that Grey Davis did in California. If
the cost of power production rises then the cost has to be passed on
to the consumer else you will go broke.
I hear that! I mean in CA a 1300 SQ ft Condo in San Diego had a $400 a month
electricity bill...in March. Man that is rediculous.
Welcome to the Golden State.
----------------------------------------------------------------------
"Why would I listen to losers?" -- Arnold Schwarzenegger
"Long term commitment in relationships is only necessary because it takes
so damn long to raise children. Marriage may well be some kind of trick
to keep the males around beyond sexual satiation." -- Captain Compassion
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
res0mp8t@NOSPAMverizon.net
.
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