Year 2008 was an extraordinary year. During the year, the company has encountered unprecedented difficulties and challenges. Facing the difficult situation, including the impact of the freezing rainstorms and snowstorms, the mega earthquake disaster in Sichuan and the international financial crisis, all management and staff of the company actively dealt with new challenges such as slowdown in power demand, surge in coal prices and overall losses of the industry. The company has achieved new progress in various aspects, including safe production, energy saving and environmental protection, project development, as well as acquisition.
The board of directors (the board) of the company affirmed the hard-earned results of 2008. Although the company has recorded an operating loss, in view of the operating conditions and in order to reward shareholders, the board recommended a distribution of cash dividend of RMB1 (including tax) for every 10 shares to all shareholders from the company’s accumulative undistributed profits. The resolution on such distribution will be submitted to the annual general meeting for approval.
In 2008, domestic operating power plants of the company realized a total power generation of 184.628 billion kWh on consolidated basis, an increase of 6.3% over the same period of the previous year; a power generation of 7.584 billion kWh of Tuas Power Ltd. in Singapore was consolidated into the power generation of the company. The growth in domestic power generation of the company was partly attributable to the safe and stable operation of the newly operated generating units of the company.
Additionally, in response to the relatively significant changes in the economic situation in 2008, the company further strengthened marketing work and formulated practical and effective marketing strategies and tactics in the power market, thereby giving full play to the competitive advantages of the company’s power plants and enhancing a relatively rapid growth in power generation of the company.
In 2008, the company recorded a loss mainly caused by unprecedented high prices of domestic thermal coal, which brought about tremendous pressure on the company’s operation. The fuel cost per unit of power sold by the company’s domestic power plants for the year increased by 46.54% as compared to the same period of the previous year. The company maintained stable supply of coal from major supply channels through enhancing unified management and coordination for fuel purchase and transportation, and further ensured a steady coal supply by actively exploring overseas coal markets and importing certain of coal for supplement.
Despite recording an operating loss, the company upheld scientific, regulated and strict management, and maintained its leading positions on a wide range of economic and technical indices within PRC. For the year ended December 31, 2008, the average equivalent availability ratio of the power plants of the company was 91.06%; the average coal consumption rate for power generated was 306.65 gram/kWh, a decrease of 0.92 gram/kWh over the same period of the previous year; the average coal consumption rate for power sold was 325.94 gram/kWh, a decrease of 2.83 gram/kWh over the same period of the previous year; and the average house consumption rate was 5.38%.
On environmental protection, the company firmly pushed forward energy saving and emissions reduction work, and proactively implemented the State policy of “Replacing small units with larger units” by developing generating units with high efficiency, low consumption, large capacity and high parameter. The company has installed flue-gas desulphurization facilities in new generating units and reinforced management of desulphurization transformation of existing generating units, continuing to maintain a leadership position in the industry on energy saving and environmental protection. As of the end of 2008, the company’s operating generating units with desulphurization facilities accounted for 86.2% of the company’s coal-fired generating units.
All of those have smoothly passed the first annual desulphurization inspection of the State Ministry of Environmental Protection. The company will ensure all the coal-fired generating units are completed of desulphurization transformation by the end of 2009 and that all coal-fired generating units attain the standards for environmental protection type generating units.
In 2008, the construction of the company’s power projects made smooth progress. Two 600MW generating units of Hebei Shang’an Phase III and two 680MW generating units of Shandong Rizhao Phase II commenced commercial operation in 2008. In 2008, the coal-fired power projects of Jiangxi Jinggangshan Phase II and Jiangsu Jinling Phase II have obtained approval from the State. Development in clean energy has made a breakthrough with the projects of Hunan Xiangqi Hydropower and Inner Mongolia Huade Wind Power having obtained approval from relevant authorities. Innovation of project construction obtained new achievements.
The first domestic 600MW-level supercritical direct air-cooling desulphurization coal-fired generating unit of Hebei Shang’an Power Plant has commenced operation. Zhejiang Yuhuan Phase I, Chongqing Luohuang Phase III, Jiangsu Huaiyin Phase III and the reconstruction and expansion project of Shandong Xindian obtained the PRC Power Quality Projects Award of 2008, of which Zhejiang Yuhuan Phase I obtained the State Quality Projects Gold Award. In 2008, the company completed the acquisition of Tuas Power Ltd. in Singapore, thus increasing the generation capacity on an equity basis by 2,670MW (accounting for about 26% of the Singapore power market) and realizing a breakthrough in entering overseas power markets.
This acquisition not only fulfilled the strategic target of Going Abroad, but also, more importantly, provided the company with an opportunity to operate and manage power plants in the Singapore power market which was conducive to enriching the company’s experience of operating and managing power plants in overseas markets and was in line with the long-term benefits of the company. Moreover, the company successively completed the acquisition of an additional 10% interest in Jiangsu Huaiyin power plant Phase I and an additional 10% interest in Shandong Rizhao Power Company Limited during the year.
In 2008, the company further strengthened capital management and actively broadened financing channels. It has successively issued RMB4 billion corporate bonds and RMB5 billion short-term debentures, thus effectively reducing financing costs, providing low-cost capital support for the safe and stable production and scale expansion of the company. In 2009, the company still faces both opportunities and challenges.
Power market: Due to the impact of the international financial crisis, the global economy declined and demand in the domestic power market reduced, thus resulting in a relatively significant decrease in the company’s power generation early this year. However, the gradual implementation of the macro-economic policy by the State will help to drive the growth of the PRC economy as well as the power demand. It is anticipated that the power generation of the company in 2009 will increase compared to last year.
