CLP Shares Fall on Concerns Hong Kong Won't Approve LNG Plant

By Winnie Zhu

Aug. 29 (Bloomberg) -- CLP Holdings Ltd., Hong Kong's biggest power supplier, fell the most in almost three months on concerns it won't get approval for a liquefied natural gas plant after the city government secured supplies from the mainland.

The stock slumped as much as 5.5 percent, the biggest drop since June 2, to HK$62.20 and was traded at HK$62.90 at 10:34 a.m. in Hong Kong. The Hang Seng Index rose 1.7 percent.

The Hong Kong government yesterday signed agreements with mainland energy producers to extend the supply of gas and electricity for a further 20 years to meet rising demand in the city. The sustained supply of cleaner forms of energy from the mainland will ``greatly'' reduce the need for Hong Kong to build an LNG terminal, the government said.

``The risk exists that CLP may not win the construction go-ahead for the LNG terminal,'' Credit Suisse Group's Hong Kong based analysts Angello Chan and Edwin Chen said in a research note today. Credit Suisse cuts CLP's rating to ``neutral'' from ``outperform.''

Winifred Wong, CLP's Hong Kong-based spokeswoman, didn't answer calls made to her office.

China National Petroleum Corp., the country's largest oil producer, will study supplying gas to Hong Kong through the second West-East pipeline, Zhang Guobao, vice chairman of the National Development and Reform Commission, said yesterday.

An LNG terminal will be built in Shenzhen to link with the pipeline, Edward Yau, secretary for environment in Hong Kong, said yesterday.

China Guangdong Nuclear Power Holding Co., the nation's second-biggest nuclear reactor operator, will extend supplies for two decades beyond 2014 to Hong Kong.

To contact the reporter on this story: Winnie Zhu in Hong Kong at wzhu4@bloomberg.net