China Power International Development Ltd, a small Hong Kong-listed power producer, said yesterday that it expects to use less of its output capacity this year owing to an industry power surplus.

China Power, which is the listed unit of one of the mainland's big five power companies, said it expected its utilization hours to drop by 5 per cent in 2006. Hours slipped nearly 0.5 per cent to 6,600 hours in 2005.

The company reported yesterday that its 2005 profit rose 4.1 per cent to 661.9 million yuan (US$82.4 million).

The increase in profit was mainly driven by a jump in the company's turnover, a stringent cost control, tax concession and energy saving, as well as reduction in other consumptions such as lowering coal consumption in power generation and improving various energy consumption benchmarks, the company said in a statement.

Its turnover saw an increase of 30 per cent to 4.36 billion yuan (US$545 million).

A final dividend of 0.079 yuan per share for the year was declared.

Hu Jiandong, executive vice-president, said that the net profit for 2005 did not increase substantially because the coal prices remained high.

The unit fuel costs for 2005 jumped 12.5 per cent over 2004.

And the cost will continue to rise in 2006, but within a margin of 5 per cent.

The company's power plants currently have 400,000 tons of coal reserve, which is above the alarm level of 250,000 tons.

Looking ahead for the year 2006, the company is upbeat about its future development, despite the difficulties such as the high fuel costs, tightened environmental measures and the impact of substantial increase in power supply arising from newly installed generating units on the utilization rate of equipment.

As for its Hong Kong venture, Li Xiaolin, vice-chairperson, said yesterday that China Hong Kong Power Development Company, a joint venture among the company's mother company CPI Holdings, China Southern Power Grid Company Ltd and Vertex Communications & Technology Group Ltd, was expected to commence its power supply in mid 2006 in Sha Tau Kok if the Hong Kong government approved its application for electricity supply by the end of this month.

Mainland power producers have been constructing power plants across the country after years of chronic power shortages. Analysts have long warned of overcapacity and falling utilization rates.

Shares in China Power ended on Friday more than 2 per cent higher at HK$2.525. The stock has fallen nearly 4 per cent in the three months ended on Thursday.

China Power said consumption on the mainland, the world's second-largest power consumer, would grow 11.8 per cent this year.

Power producers on the mainland will soon be allowed to raise electricity prices based on coal costs. The company said it would help the firm to offset rising fuel costs.

(HK Edition 03/18/2006 page3)