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China plans to slash coal-fired power capacity at its five biggest utilities by as much as a third in two years by merging their assets, according to a document seen by Reuters and four sources with knowledge of the matter.

The move to shed older and less-efficient capacity is being driven by pressure to cut heavy debt levels at the utilities. China, is, however, building more coal-fired power plants and approving dozens of new mines to bolster a slowing economy.

The five utilities, which are controlled by the central government, accounted for around 44% of China’s total coal-fired power capacity at the end of 2018.

“[The utilities] will strive to reduce coal-fired power capacity by one-quarter to one-third ... cutting total losses by more than 50% from the current level to achieve a significant decline in debt-to-asset ratios by the end of 2021,” the document said.

The plan, initiated and overseen by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), follows heavy losses at some of the utilities.

Some of their coal-fired power stations have filed for bankruptcy in recent years as Beijing promotes the use of renewable energy and opens up the state-controlled power market.

The SASAC did not immediately respond to a fax seeking comment and the sources declined to be identified as they were not authorized to speak to the media.

The utilities — China Huaneng Group Co., China Datang Corp., China Huadian Corp., State Power Investment Corp. and China Energy Group — did not respond to faxes requesting comment.

 

Source: https://the-japan-news.com/news