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FAQ Message |
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 Please explain the progress on implementing the Company's development strategies and the opportunities and challenges ahead. |
During the Year, our developing strategies were well executed: First of all, new units commenced operation successfully. In 2004, Datang Power commenced operation on newly installed capacity of 2,600MW, including two power generation units of 600MW each at Tuoketuo Power Company Phase II, two units of 300MW each at Tangshan Thermal Power Company, one unit of 500MW at Shentou Power Company and one unit of 300MW at Liancheng Power Company. With the newly installed capacity, our total installed capacity exceeded 10,000MW for the first time reaching 10,410MW. The majority of these newly constructed units commenced operation ahead of schedule. On the other hand, our strategic deployment started to take shape. The progress made in the development of hydro power in western China was satisfactory, and the preparation works for major thermal power projects in the coastal area of eastern China made solid progress.
We expect our business to maintain steady but rapid growth in 2005: Two units of 600MW each at Tuoketuo Power Company Phase III, one unit of 300MW at Liancheng Power Company in Gansu, one unit of 500MW at Shentou Power Company, the first unit of 50MW at Nalan Hydropower Company and the first hydropower unit of 60MW at Lixianjiang Power Company will take turn to commence operation this year. We shall ensure the projects to be completed this year to provide an additional capacity of 2,110MW. Besides, we shall actively carry out the other projects which have been approved and are under construction. We aim to complete our new installation plan this year ahead of our target. At the same time, in order to consolidate the steady progress of our principal power generation business, in 2005 we will aim to enhance the vertical integration of our operation, with a view to lowering the market risks of our principal business, raising profitability, strengthening our cost advantages and better preparing ourselves for the future market competition.
Good opportunities for us to pursue: Due to the rapid development of the national economy, the power industry has an urgent need to expand substantially in order to resolve the problem of power shortage. There exists a huge room for an increase in capacity due to market demand. Gradual reforms in the power market have enhanced transparency of the tariff mechanisms. On-grid tariffs of new installation will be determined according to average purchase prices of electricity of the regional grid, which will enable power generation companies to ascertain, at the beginning of the decision making of their investments, the on-grid tariffs after the commencement of operation. Our investment risks will therefore be lowered. Datang Power will strive to make full use of our advantages, and make rationalised arrangements on the preparation works of new construction projects, the purchase of equipment and the sourcing of coal supply. We shall leverage our extensive development experience in new projects to seek, on the basis of quality construction, shorter construction periods and lower construction costs. With new units in the pipeline, we will be able to sustain our growth in profitability.
Challenges and corresponding measures in the course of development: At present, the coal market of China is relatively volatile, posing challenges to us in terms of fuel supply and cost controls. We will tackle these challenges through measures such as locating our plants at mine-mouth, and investing in railway and coal mines. The increase in raw material prices has caused a rise in construction costs for our new projects. We will seek to lower the costs by placing early orders, making rationalised arrangements of construction schedules and improving construction designs. The construction costs of the new projects that we have completed in recent years were generally lower than the industry's average level. When there is an equilibrium between supply and demand of electricity in China, power pooling will be introduced. We have already prepared ourselves for it, and we will seek to consolidate our competitive advantages through our sustained efforts in cost controls.
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