Construction of major projects in a 50-billion-yuan ($7.29 billion) energy cluster, one of the largest coal chemical bases in Asia, started yesterday in the Ningxia Hui autonomous region.
The 3,500-sq-km cluster, known as Ningdong Energy-Chemical Base, in which total investment is projected to hit 300 billion yuan by 2020, is part of the government's efforts to develop resources in Western China and spur domestic demand.
Leading domestic energy companies including State Grid Corp of China and Huadian Power International Corp yesterday started construction of three power plants, three coal mines, one electricity distribution line and one coal-to-petrochemical plant within the base.
State Grid, China's biggest power distributor, will also invest 10.4 billion yuan to build a 660-kilovolt transmission line linking coal-fired and hydropower stations in Ningxia with Qingdao in the eastern province of Shandong. The line, to be completed by 2010, will help ease the pressure to transport the dirty coal from western China to Shandong, the local government said.
Hong Kong-listed Huadian Power and Ningxia Power Generation Group will lead the construction of three coal-fired electricity plants worth 16.4 billion yuan in the region. The plants will have a total capacity of 4,400 megawatts.
A total investment of 7.6 billion yuan will be made to construct three coal mines with a combined annual capacity of 22 million tons.
One 1.7-billion-yuan plant also started construction to turn coal into petrochemicals.
"The financial crisis has weakened the coal prices and electricity demand in China, providing an opportunity to restructure the country’s energy industry," said Zhang Guobao, head of the National Energy Administration.
China's economy expanded at the slowest pace since 2003 in the third quarter as export orders shrank and industrial production waned. The Chinese government last month unveiled a 4-trilion-yuan stimulus plan to spur the economy as the world slowed down into a recession.
Ningxia currently has 30 billion tons of proven coal reserves, of which 27.3 billion are in Ningdong, the local government said.
By 2020, Ningxia will have power plants with 16,000 megawatts in total capacity, coal mines able to produce 130 million tons of the fuel a year and coal-to-chemicals plants with an annual capacity of 20 million tons.
The Chinese government is now speeding up approvals for energy projects as part of its efforts to spur the economy.
Shenhua Group Corp, China's biggest coal producer, will start operating the nation's first direct coal-to-liquids (CTL) project early next year, Ning Chenghao, a researcher with Shenhua CTL Institute, told China Daily last Friday.
The plants, located in Inner Mongolia autonomous region, have an annual production capacity of one million tons.
China Huaneng Group said last week it has started building the nation's biggest solar power plant with an investment of 9.1 billion yuan. The company said it plans to begin operating a 166-megawatt solar project in Yunnan province in 2010.