November 22, 2008

China grid repairs to cost USD 5 billion

Bloomberg reported that State Grid Corp of China, the country's largest electricity distributor repairs to its national grid after last month's earthquake in Sichuan cost CNY 34.6 billion. State Grid Corp of China faces a direct economic loss of more than CNY 12 billion from the temblor that struck the southwestern province on May 12. Sichuan alone accounts for CNY 10.6 billion.

State Grid said “The lower profit is due to the two natural disasters in the first half of the year.''

Mr Lu Jian spokesman said State Grid spent CNY 70 billion in the first five months on maintaining and expanding its grid an increase of 14.5% from a year earlier. The power supplier is facing huge pressure and is trying to meet its 2008 profit target.

Mr Wang Wei an analyst with Guotai Junan Securities Co said “Natural disasters will greatly hurt State Grid's profitability this year. But the repairs will boost orders for manufacturers of power cables and equipment.''

State Grid distributes power in 26 provinces and regions, covering 80% of China.