March 7 (Bloomberg) -- Huaneng Power International Inc., the listed unit of China’s largest electricity producer, said its performance will improve this year after prices rose and the government capped the cost of coal.
The utility won’t post a loss in the first quarter, Chairman Cao Peixi told reporters in Beijing today.
Huaneng Power, listed in Hong Kong, said Jan. 30 it expects to report a profit decline of more than 50 percent for last year, based on Chinese accounting standards. China, which controls utility prices to curb inflation, increased power prices for the first time in six months on Dec. 1 to help electricity producers that have posted losses because of rising fuel costs.
The company’s coal costs probably won’t increase this year, Cao said. China uses coal as fuel at about 80 percent of its power plants.
The government has capped prices of coal for immediate delivery at 800 yuan ($127) a metric ton at nine northern Chinese ports, including Qinhuangdao, the biggest shipment point for seaborne supplies, since the start of the year.
Huaneng Power has gained 6.3 percent in the past year, compared with the 11 percent decline in the Hang Seng Index. The stock fell 1.1 percent to HK$4.73 as of the midday break.
China’s electricity shortage may worsen in the next two to three years as low profit margins dissuade plants from investing in new capacity, Cao said. The government should subsidize utilities for new thermal-power projects, he said.
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