Chinese government officials in the south eastern province of Fujian are seeking to reduce the price they pay to two power generators for electricity. Oversupply has made the power from the two plants overpriced, the officials claim.
The two plants are the 720 MW Meizhou Wan plant which is run by InterGen with investors including El Paso Natural Gas and Lippo China Resources, and Houshi, a planned 3600 MW project funded from Taiwan. The Asian Development Bank is also supporting Meizhou Wan. The provincial government of Fujian has already reneged on power purchase agreements with the plants.
The Fujian Province Power Corporation is offering $0.53/kWh at Meizhou, a cut of around 27 per cent in the tariff agreed in the original power purchase agreement. The consultancy Urandaline said that such breaches in agreements had been common in the Chinese power industry in recent years. However problems with these two high profile projects, the first approved by the Chinese government that were completely foreign-owned, are likely to make future investors wary of China.
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