December 03, 2008

Chinese utilities profits in 2 months down by 56% YoY

XFN-Asia reported that more than 40% of China's large electricity producers suffered losses in the first two months of 2008, hit by record high coal prices and the freezing weather that incapacitated much of the south.

The report said the 4,773 large power firms monitored by the National Bureau of Statistics had combined profits of CNY 9.541 billion in January and February down by 55.85% YoY. The profits of thermal power firms fell 75.39% to CNY 2.549 billion. But of the total number of large producers, 1,990 had combined losses of CNY 13.792 billion. The amount of the loss was 218.29% greater than in the same period of last year.

CEC said demand growth also slowed over the two months, mainly because a large amount of capacity was offline as a result of the storms, but also as a direct consequence of the fixed electricity tariff system. It said that the power sector also faced increased financial costs as the state continued to raise interest rates on loans for the construction of new power projects. Financial costs for the 4,773 firms rose 33.78% YoY to CNY 17.465 billion in the first two months of the year.

The CEC said over the first two months of the year, the profits of China's coal sector rose 66.8%.