Interim Results and Investors Q&A for the Year of 2015
Datang International Power Generation Co., Ltd.
一、 Presentation of Interim Results 2015 of the Company
Ladies, gentlemen, and friends,
It is a great honor for me to give you the review of the operational performance and businesses and analysis of market and policy environment for the first half of 2015 and business outlook for the second half of 2015 on behalf of the management of the Company (Datang Power). My presentation is divided into the following three parts:
- Review and analysis of the operational performance for the first half of 2015;
- Analysis of the market and policy environment for the first half of 2015; and
- Business Outlook for the second half of 2015.
Review and analysis of the operational performance for the first half of 2015. By the end of June 2015, the total installed capacity has amounted to 41,522 MW, a year-on-year increase of 0.43% compared to 2014. During this period, the accumulative power generation amounted to 87.003 billion kWh, a year-on-year decrease of 4.32%, and a total of 19,950,000 tonnes of coal was produced by subsidiaries of the Company, representing a year-on-year increase of 20%. A total of 13,800 tonnes of polypropylene was produced, representing a year-on-year decrease of 79.77%.
Major financial indicators and analysis. Affected by the drop of both power generation volume and tariffs, during the first half of 2015, the Company realized an operating revenue of RMB31,609 million, a year-on-year decrease of 9.29%. The net profit attributable to equity holders of the Company amounted to RMB2,044 million, a year-on-year increase of 3.5%. The earnings per share reached RMB0.1536, a year-on-year increase of 3.5%. The consolidated debt-to-asset ratio of the Company was 79.1%, a year-on-year decrease of 0.03%. The Company further optimized its debt structure and decreased its financial costs by RMB123 million.
The power generation companies of the Company have put a total installed capacity of 177 MW into commercial operation. The installed capacity of generating units managed by the Company showed a year-on-year increase of 0.43% and 1.98% respectively. The power generation capacity continued to increase. The power generation structure showed a continuous improvement. Coal-fired units accounted for 75.82% of the total generating units, a year-on-year decrease from 76.15%. The proportion of clean energy generating units accounted for 24.18% by the first half of 2015, representing an increase from 23.85% over the same period of 2014, among which hydropower, wind power, and photovoltaic power accounted for 12.37%, 4.38%, and 0.46%., respectively.
The average utilization hours of all-inclusive generating units of the Company amounted to 2096 hours, representing a year-on-year decrease of 200 hours, among which the value for thermal power units amounted to 2252 hours, representing a year-on-year decrease of 270 hours, for hydropower units it amounted to 1465 hours, representing a year-on-year increase of 183 hours, and for wind power units it amounted to 1043 hours, representing a slight year-on-year increase. Compared with the national average level, the average utilization hours of the generating units managed by the Company showed an increase of 160 hours for all-inclusive generating units, an increase of 94 hours for thermal power units, a decrease of 47 hours for hydropower units, and an increase of 42 hours for wind power units.
The power generation segment showed its obvious advantage and thermal power generation segment had an outstanding profitability. Over the first half of 2015, the power generation segment realized a total profit of RMB6,187 million, which reached a new high. The thermal power generation segment realized a consolidated profit of RMB5,680 million, accounting for 91.8% of the total profits of the power generation segment. In addition, the hydropower, wind power, and photovoltaic power generation segments will realize profit soon.
The following are the review and analysis of the structure of and changes to the power generation costs for the first half of 2015. In this period, the costs of the Company were effectively managed and controlled. The fuel cost took the largest share of 49.99% in the profit cost, representing a significant decrease from 54.06% due to drop of coal price. The fuel cost (excluding the gas cost) was RMB137.72/MW, a year-on-year decrease of 15.54%.
In the first half of 2015, the Company put more efforts to energy conservation and environmental protection, and made continuous improvement in emission reduction indicators of major pollutants, such as sulfur dioxide, nitrogen oxides, smoke ash, and waste water. During this period, the total operation rate of desulfurization facilities, desulfurization efficiency, and the overall desulfurization efficiency amounted to 100.00%, 57.04%, and 97.04%, respectively. The total operation rate of denitrification facilities, denitrification efficiency, and the overall denitrification efficiency amounted to 99.56%, 81.99%, and 81.71%, respectively. The total coal consumption of the Company for power supply was 304.72 g/kWh, representing a significant decrease of 5.23 g/kWh on a year-on-year basis. In accordance with the national and local government’s requirements, the Company planned to modify 28 units with a total capacity of 9440 MW into ultra-low emissions units. In the first half of 2015, the Company finished the modification of two units with a total capacity of 660 MW. The Company promises to finish the modification of six units with a total capacity of 1720 MW and to strive to finish the modification of the rest 20 units with a total capacity of 7120 MW.
The Group has made prominent achievements in early project preparations. By the end of July, nine power projects of the Company have been approved with a total capacity of 4877 MW, including Guangdong Leizhou Thermal Power Project, Inner Mongolia Xilinhaote Thermal Power Project, Hebei Tangshan Beijiao Co-generation Heat and Power Project, Luludao Thermal Power Project, with the total capacity of 4720 MW, Wujiang Yinpan 45MW hydropower capacity expansion project, Pinghu 32 MW wind power project, and three photovoltaic projects with a total capacity of 80 MW.
In terms of the coal business, a total of 19.950 million tonnes of raw coal was produced by the Company’s four partially-owned and wholly-owned coal mining enterprises over the first half of 2015, representing an increase of 3.330 million tonnes over the same period of last year. However, due to market situation, the overall profit continued to decline. For instance, the losses of Yuzhou Mining amounted to RMB63.70 million, representing a year-on-year increase of RMB45.39 million. Tashan Mine, Datong Coal Group realized the investment return of RMB87.69 million, representing a year-on-year increase of RMB410,000. Xilinhaote Mining suffered from a loss of RMB259 million, representing a year-on-year increase of RMB16 million.
In terms of the coal chemical business, the Company continued to push forward the work of coal chemical business restructuring. Meanwhile, the Company also stepped up management and achieved overall targets regarding production safety and environmental protection. Duolun Coal-based Polypropylene Project finished the modification for environmental protection and the repair of the gas-cooled reactor for methanol synthesis, and a total of 13,800 tonnes of polypropylene was produced, representing a year-on-year decrease of 79.77%. The accumulative loss of this business segment was RMB1.555 billion, representing a year-on-year increase of RMB313 million.
2. Brief analysis of the market and policy environment for the first half of 2015. Due to adjustment of economic structure, national power consumption in this period grew only by 1.3% year-on-year, representing a year-on-year decrease of 4.1% in the growth rate. By the end of June, the aggregate installed capacity power plants above designated size amounted to RMB1.36 billion kW, representing a year-on-year increase of 8.7%. In the first half of 2015, accumulated average utilisation hours of power generation facilities was 1,936 hours, representing a year-on-year decrease of 151 hours, and the average utilization hours of thermal power units amounted to 2,158 hours, representing a year-on-year decrease of 217 hours. Due to the weak macro-economic conditions and greater pressure on adopting environmental protection efforts, demand of major coal-consuming industries saw a significant decrease. This led to a worsening of oversupply in the coal market, leading coal prices to plunge and remain low as a result. In the second half of the year, coal prices are expected to remain low and may pick up slightly provided that large coal enterprises are able to decrease production volumes as required.
The new round of electric power system reform started along with the release of Document No.9 of the central government in March. In this reform, we should solve the following five problems:
- Market transaction mechanism is absent, with low efficiency in resource utilisation;
- Rational pricing relationships are not built; market-driven pricing mechanism has not fully formed;
- Transformation of governmental functions is incomplete, and various types of planning and coordination mechanisms are not in place;
- Due to deficiency in developmental mechanism, the development and utilisation of new and renewable energy face difficulties;
- Backward legislation constrains the marketisation and development of the power sector.
Recently, the Company made the following two breakthroughs during the reform: direct power supply to large consumers and opening up of power sales side. After the reform, more and more power generation will be traded in market way, including direct supply to large consumers. In the circumstances of relative oversupply of power, the market price will be significantly lower than the government regulated price (various benchmark on-grid tariffs).
3. Business outlook for the second half of 2015.
First, the Company will continue to enhance the profitability of power generation segment. In terms of coal power, the Company will take the opportunity of the peak load period in summer and heating period in winter in the second half of the year to increase power generation, and further suppress coal prices and coal consumption. In terms of gas power, the Company will fight for increase in power generation and make sure government subsidies are in place in a timely manner. In terms of new energy, including hydropower, wind power, and photovoltaic power, the Company will optimise dispatching and increase power generation, and reduce disuse of water, wind, and photovoltaic energy. In terms of nuclear power, the Company will strive to achieve substantial increase in power generation and substantial improvement in investment returns of Ningde Nuclear Power Project as Unit 3 has been put into operation and Unit 2 has finished the overhaul.
Second, the Company will reduce the losses from non-power generation businesses. In the coal-based polypropylene project, the installation restarted and operated smoothly after the leakage issue of the gas-cooled methanol reactor was resolved. Since June, the 3 gasification furnaces underwent continuous high-load serial operating and hit a new record in single day methanol production volume, which is conducive to cutting losses in the second half. In the coal-based natural gas project, Unit A resumed on-grid operation after restarting and completed the modification of the power control room to limit increase in production capacity for environmental protection purposes. Natural gas settlement issue was resolved as well. In the coal-based fertiliser project, current production volume is stable with good operational performance; continuous drop in unit energy consumption can be seen. In the Xilinhaote Mining project, the Company will be able to ensure coal supply to Keqi and Duolun projects. Losses are expected to be kept under control and to drop in the second half of 2015 as coal production steps up following the increase in production at Keqi and Duolun projects. In the renewable resource project, losses reduced year-on-year in the first half of 2015 with continuously improving facility operation and decline in energy and material consumption. Losses are expected to continue to decline in the second half of 2015.
The Company set an overall target on improving the comprehensive competiveness and profitability in the second half of 2015. To achieve this target, the following five key measures should be taken:
- Enhance management of loss-making enterprises and improve the quality of power generation companies.
- Carry out revenue enlargement and cost reduction scheme to raise the Company’s net profitability.
- Ensure that projects-in-progress commence production on schedule, including Fuzhou Unit 1 and 4 units of Huangjinping Hydro Power with total capacity of 1800MW to further enhance the power generation capacity and optimise the power generation structure.
- Spare no effort in promoting the coal chemical restructuring and coal-fired asset injection from parent company.
In addition to achieving satisfactory operational performance, the Company will make effort to consummate the Thirteenth Five-Year Development Plan, which will firmly adhere to the value-focused and results-oriented principles and highlight the improvement of development quality and profitability. With forging an ungraded power industry as basis and motivated by technology innovation, the Company proactively adapts to the new normal of economic development and accelerates its structural adjustment to maintain efficient, clean and sustainable development of core power generation business. The Company manages to become an energy enterprise with prominent core competitiveness and superior sustainable development capacity.
二、. Investors Q&A
1. As the coal chemical business operate satisfactorily, does it indicate that all outstanding problems have been solved and coal chemical projects will maintain stable operation in the far future without unscheduled major repair, or just temporarily?
China’s coal chemical industry has attracted much attention not only from the capital market but form the entire society. Datang Power is just one of the enterprises developing rapidly in this industry. By now, satisfactory operation means the improved operation condition. Taking Duolun project as an example, this project received the order for rectification upon suspension of production from competent authority of Inner Mongolia in August 2014 and finished the rectification in February 2015. This project resumed the operation in March 1, and suspended the operation again for repair due to new problem in China’s first domestically manufactured methanol reactor used in this project and resumed the operation again on June 13. In this case, the production volume of this project only amounted to13,800 tonnes over the first half of 2015. Despite the low production volume, the continuous operation period of gasifiers was 57 days, exceeding the past record of 44 days. During this period, three gasifiers operated continuously under 75% load. The maximum production volume of methanol reached 3,782 tonnes, equivalent to a load rate of 75%. The period of continuous operation under an average load of above 80% was 52 days. From the above, we can see that some technical problems are gradually solved and technical performance reached a new record. However, compared with other conventional gasifiers, some improvements are required in this project. In the previous communication sessions, we mentioned that the gasifiers in Duolun project made three records in the industry in the world: first, they are the first Shell gasifiers operating on lignite; second, they are the first gasifiers with the coal treatment capacity for each gasifier of 2,875 tonnes, and the first gasifiers with six-nozzle burner. All these bring many difficulties to us. However, we have made some technical improvements. According to the data, the load rate will reach 50% or 60%, which improved a lot compared to the past data as we have accumulated experience in operation.
Corrosion had ever occurred to the gasifiers in Keqi project. But after treatment by overlaying welding, corrosion and leakage have not occurred again since January last year in an accumulative period of more than 330 days. This indicates that this problem has been preliminarily solved. In spite of these achievements, we continues to make research and desire to make further achievements in technical research on this national demonstration. In Keqi project, the continuous operation period of one gasifier was 240 days from November 17, 2014 to July 17, 2015, and that of the other gasifier was 163 days, which take the lead among domestic peers. The gasifiers in Keqi projects are the first domestically manufactured gasifiers that operate under the pressure of 40kg class. As a demonstration project, this project undertakes the research task and aims to accumulate experience in the gasification of future coal-to-SNG projects and coal-to-olefin projects.
2. What progress did the Company make in negotiating for restructuring of coal chemical business?
State-owned Assets Supervision and Administration Commission (SASAC) and Datang Group (state-owned holding company) has paid much attention to the restructuring since its starting in July last year. Steady progress has been made in due diligence investigation, audit and assessment, and design of restructuring architecture. SASAC is now facing arduous task for the reform of state-owned enterprises. Especially in this year, restructuring of some state-owned enterprises has been progressing steadily. Both SASAC and Datang Group are committed to achieve the predetermined goal of the restructuring; however the progress is lagging behind schedule. We initially anticipate that the restructuring can be finished in 2014. Later we postponed the schedule to the first half of 2015. However, we encountered some uncertainties in the progress and therefore it is planned to finish the restructuring by the end of 2015. In this way, we can finish this task in the last year of the Twelfth Five-Year Plan, which the most strenuous task of us.
3. As shown in the Company's financial report that the investment returns of our associates have significantly increased according to international standards, in addition to Ningde Nuclear Power Project are there any other contributing parties?
The Company's investment returns showed a significant year-on-year increase over the first half this year, which are primarily contributed by two projects: one is Ningde Nuclear Power Project, and the other is a real estate project in Beijing—Shangshanruoshui Project. Ningde Nuclear Power Project contributed RMB200 million plus and finished the overhaul in the first half this year, making the record of being the project with the shortest overhaul period for single unit. The real estate project has obtained pre-sale permit. The Company took equity stakes in this project and had pulled out of this project after project closing according to the investment requirements for state-owned enterprises. These two project contributed nearly RMB400 million to the investment returns of the Company. Other projects of the Company maintained stable increasing investment return in this period.
4. As we are known that the parent company promised to inject the assets of Heibei subsidiary by October this year, does the Company have any concrete ideas or actions?
Injection of thermal power assets by Datang Group to Datang Power has attracted wide attention from the market. Since the equity division reform, major shareholders have promised to inject the assets of Heibei subsidiary to the Company where appropriate. This year, the Group again promised to inject the assets into Datang Power by October this year. The injection of assets has been started at the business level and we have researched and discussed on the procedure of this injection at the technical level. Currently we have two major capital operation tasks, restructuring of coal chemical business and injection of assets from major shareholders. These tasks are facing many uncertainties at the operational level. Specifically, assets injection will be influenced by the restructuring of coal chemical business, which however is facing complexity and uncertainty in the progress. Certainly, we hope that both the restructuring and assets injection can be completed by this year. We have considered completing the injection during the development of the Thirteenth Five-Year Plan. It is predicted that the progress of restructuring of coal chemical business will influence the completion time of assets injection from the parent company at the operational level.
5. What plan does the company have for the new round of electric power system reform in China? As the industry peers have gradually established electricity sales companies, what concrete ideas do we have?
In March this year, the government released the Several Opinions on Further Deepening the Reform of Electric Power System, which signifies the beginning of the new round of electric power system reform. This document mainly aims to deregulate the electricity tariff in the links other than power generation and distribution, plan of the power generation for purposes other than public service and regulation, open electricity sales business to social capital, and promote independent operation of trading organizations. The opening of electricity sales business will become the focus of attention from large power generation companies. Currently, the government is planning its five major supporting documents. Although seven pilot projects have been launched, relevant parties are still waiting for the release of supporting documents issued by the central government before taking further actions. The new round of electric power system reform is consistent with the new normal for the development of electric power industry and conducive to the development of the society and power generation enterprises. However, large power generation enterprises will face both opportunities and challenges during the reform.
In the new round of reform, the Company will grasp opportunities and meet challenges. Specifically, the following improvements will be achieved: first, we should improve our competitiveness and increase the investment in reducing the energy consumption of our units so as to improve the competitive advantages in the market in an all-round manner. In the past years, the Company has been committed to reducing energy consumption. Recently, the National Development and Reform Commission, Ministry of Environmental Protection, the National Energy Board jointly issued the Plan for Upgrading and Modification of Energy Conservation and Emissions Reduction. According to this plan, the Company developed a comprehensive upgrading and modification plan for recent three years. In this plan, more than 20 units in nine power plants, including Datang Togtoh Power Plant, Chaozhou Power Plant, Ningde Power Plant, and Zhangjiankou Power Plant. All these aim to reduce the emissions from power generation to improve our competitiveness in the market. Second, we should improve the market response ability. According to the central government’s overall requirements on the electric power system reform, the strategy of “Regulating Intermediate Links and Deregulating Links at Both Ends” should be implemented, in another word, to increase the degree of marketisation for intermediate links in the power system, including power generation, sales, and consumption and ensure strict regulation on power transmission and distribution. In the electricity sales link, we have two important markets, one for direct power supply to large consumers and the other for electricity sales business. As for direct power supply to large consumers, all regions except in Beijng-Tianjin-Tangshan Region have been in the progress or started the research on relevant policies, market analysis, cost calculation, and communication with large power consumers, and have made some achievements in these aspects. From January to July this year, the total electricity quantity under the contract for direct power supply to large consumers reached 7 billion kWh. It is predicted that in the following months this year there is some potential in such regions as Yunnan, Liaoning, and Fujian for an increase to a total of 8-8.5 billion kWh, which is approximately doubled compared with last year. With the progress of electric power system reform, trading scale of direct power supply to large consumers will be enlarged accordingly. The Company has been committed to enhancing talent cultivation, improving comprehensive ability, and increasing the market share to create potential for making profit and maintain sustainable growth. As for the electricity sales business, the Company will keep abreast with the reform and pay close attention to the major five supporting documents to be released soon by competent authorities. In addition, the Company will seek opportunities to participate the electricity sales business in the regions with adequate competition and large market share to ensure that the Company can occupy favorable position in the market competition.
6. What is the Company's plan to put Keqi coal-based natural gas project into production? What is the gas price in the first half of the year?
In accordance with relevant provisions, equipment can be turned into fixed assets only after achieving the desired design production capacity. However, due to various reasons, the production equipment of Keqi has not met the requirements of turning into fixed assets. The great number of production in the first half of the year is 320 million standard cube, but it should have reached 667 million cubic according to the design capacity. In this sense, it has not met the requirements of turning into fixed assets.
With regard to the gas price, the state issued a document about the gas price adjustment in April. Thought this document doesn't specify the price of coal-based natural gas, the adjustment mechanism has been provided in the natural gas contracts between Datang and CNPC. The price that has been adopted after negotiation is RMB2.47, and the price prior to adjustment is RMB2.74. The weighted average price is RMB2.58 in the first half year.
7. How many changes of the standard coal price in the 1st quarter and 2nd quarter compared with the last year on year-on-year basis? And how many changes are there compared with the beginning of the year? How about the possibility of lowering the grid purchase price in the future period of time?
The unit price of standard coal has been falling since the end of last year. In December, 2012 the price of standard coal was RMB470, and dropped to RMB460 in March, 2015, a decrease of more than RMB10. It reached RMB376 at the end of June. The overall unit price of standard coal from January to June was RMB438. We believe the price will remain stable in the second half of the year and it is not likely to rise in July, August and September. As there will be an increasing demand of coal brought by heating supply from October, and along with the production restriction and price increase adopted by upstream coal enterprises, the coal price in the last three months of this year is expected to rise.
The electricity price will not be adjusted in the second half of the year. We have always maintained communication with the NDRC concerning this matter. Judging from current situation, the electricity price will not be adjusted in the second half of the year. Because the adjustment is usually made once a year, and only the increase in the average coal price during a certain period reaches or exceeds 5% in comparison with the previous period, the electricity price will be adjusted accordingly. As the electricity price was adjusted on April 20, given the adjustment cycle, there is little possibility of lowering the electricity price.
8. What does the Company’s financing benefit from the central bank's adjustment of benchmark interest rate for loan three times this year? How much is the cost of company’s financing?
It is good news for the real economy that China's central bank has cut its benchmark interest rates for loan several times this year. First, the Company has been using this channel to communicate and negotiate with the financing institutions for the purpose of lowering the cost of financing by various means, for example, by adjusting the interest rate adjustment period. Because the interest rate shall be adjusted based on a long adjustment period as specified in many contracts, after we made adjustments, the rate can be adjusted quarterly or monthly so that we can benefit from the cutting interest rate as soon as possible. Second, during the period of interest-rate reduction, the whole financing environment became relaxed, so the Company has favorable opportunity to gain interest rate reduction. Third, the Company has strengthened the management and coordination, organized the financially capable enterprises to repay the loan ahead of time, and made great efforts to save cost. In the first half of the year, the Company’s financial cost was saved about RMB250 million. The financial cost of over RMB500 million is expected to be saved at the end of the year compared with the plan developed at the beginning of the year. With the aid of a series measures, a lot of money can be saved compared with the budget of the beginning of the year. So far, the comprehensive loan interest rate has been remained at about 5.3%.
9. What is the company’s capital investment plan for this year?
At the beginning of this year, Datang Power’s capital expenditure plan for large scale capital construction amounted to RMB17.7 billion; by now, the company modified this plan based on actual situation—the annual investment plan was changed to RMB19.7 billion, among which RMB7.8 billion on thermal power, RMB6.7 billion on hydropower, RMB1 billion on wind power and solar energy, RMB0.68 billion on coal mines, RMB3 billion on coal chemical business, and RMB0.27 billion on others. This company’s investment focuses on power generation. In this year, we approved a generation capacity of 4.870 million kW, including mainly Guangdong Leizhou 2×1000MW, Tangshan Beijiao Co-generation Heat and Power 2×350MW, Xilinhaote Thermal Power 2×660MW, Huludao Co-generation Heat and Power 2×350MW, Qinghai Gonghe Photovoltaic Phase III 10MW, Qinghai Golmud Phase III 50MW, Hebei Fengning Wind Power 20 MW, Zhejiang Pinghu Wind Power 32MW, Wujiang Yinpan Hydropower 45MW. The company invested relatively heavily on power generation; it is estimated that in 2017 and 2018, these quality thermal power projects will be put into operation collectively, and the profitability of the power generation segment will be further improved.
10. It is also indicated in announcement that the company’s capital expenditure for this year is about RMB19.7 billion, including RMB5.6 billion in the first half of this year; so why the capital expenditure in the second half of year exceeds the first half by so much?
Due to tight time schedule, the investment for coal chemical projects was not included in the annual investment plan, which was prepared at the beginning of this year. The annual investment was initially determined to be RMB17.7 billion. With the development of the final investment for coal chemical projects and adjustment for actual demand for recently approved power projects, the planned annual investment is changed to RMB19.7 billion, representing an increase of RMB 2 billion compared with the plan at the beginning of this year. These approved power projects will be collectively commenced at second half this year. Therefore, the investment progress at first half and second half differs, but is in compliance with the capital construction plan of this company.
11. What are the average tariff of direct-supplied power and local benchmark price at first half this year? Will the price difference increase compared with the same period last year? Are there any provinces that have dramatic price difference between the tariff of direct-supplied power and local benchmark price?
From January to July at first half of year, our company signed a total of 7.001 billion kWh direct electricity purchase contracts; from January to June the figure is 6.604 billion kWh, RMB21.52/MWH lower than benchmark price; and the transaction amount settled is 2.855 billion kWh, representing a decrease of RMB30.72/MWh compared with the benchmark price. This year the power plant with the biggest direct-purchase electricity price drop is Jinzhou Thermal Plant, by RMB0.85/MWh. The power plants with collective direct electricity supply business include Fujian Ningde Nuclear Power and Guangdong Chaozhou Power Generation Co., Ltd. Generally, the direct-purchase electricity price drop in this year is roughly equivalent to that over the same period of last year.
12. If the company still cannot complete reorganization due to some reasons by the end of year, does the company have any backup plan? For example, temporarily place the assets in the parent company, and then find the solutions together with SASAC from parent company level.
During coal chemical industry reorganization, this plan had been verified as an alternative. Through verification, however, the SASAC determined that it should be lead by SASAC and operate using market forces. If reorganization still cannot be completed by the end of year, should we place the assets in the parent company? This question has not been considered till now.
13. After the electricity price of Fujian dropped at the first half this year, will the electricity prices of unit 3 that was newly put into operation and unit 4 that will be put into operation of Ningde Power Plant follow the current benchmark price of thermal power?
The electricity price of Fujian Ningde Nuclear has been set; the grid purchase prices of units 3 and 4 are the same with that of units 1 and 2, i.e. RMB0.43/kWh.