China's Five Power Producers Had $3.9 Billion Losses

By Wang Ying

Dec. 5 (Bloomberg) -- China's five biggest power producers lost 26.8 billion yuan ($3.9 billion) in the first 10 months of this year after raw material costs rose and a slowing economy curbed demand, a company official said.

China Huaneng Group, the nation's largest power utility, lost 3.4 billion yuan, while China Datang Corp.'s losses were about 6 billion yuan, said the official from one of the groups, who declined to be named because of company rules. The utilities have informally asked the government for help, he said in Beijing today.

Domestic power output fell 4 percent in October, the first decline since March 2005, according to government data released last month. Coal costs reached a record in July while electricity use dropped as China's economy expanded at the slowest pace since 2003 in the third quarter.

Coal-fired electricity producers may lose more than 70 billion yuan this year as power demand growth falls an estimated 7 percentage points, said a government official. Suppliers will continue to face cost and demand pressures, he said, asking not to be named because of government rules.

China Huadian Corp. recorded a loss of 6.07 billion yuan between January and October, China Guodian Corp. incurred a deficit of 6.55 billion yuan and China Power Investment Corp.'s losses were about 4.85 billion yuan, said the company official. Datang will post a full-year loss, he said.

The country's power demand growth may slow to 8.1 percent this year and 7 percent in 2009, Hao Xiangbin, a director at the Coal Transport and Distribution Association, said in Beijing today. China's electricity production has maintained double-digit growth for at least the last four years.

Huaneng Group said in October it plans to cut annual spending by 5 percent this year because of a ``significant decline'' in nine-month profit.

To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net;