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Yangtze offering could be one of largest on domestic market
( 2003-10-14 00:53) (China Daily)

The initial public offering (IPO) of Yangtze Electric Power Corp, which could be one of the largest listings on the domestic market, will go ahead this year, despite being postponed last month, said a senior company manager.

Lu Youmei, president of the China Yangtze Three Gorges Project Development Corp, the parent company of Yangtze Electric Power, yesterday said the State Securities Regulatory Commission is still to give the go ahead on the listing, but "there is no problem for the listing to go through this year.''

Lu declined to say how much it plans to raise through the IPO, but claimed that it would be one of the largest in China.

Earlier reports said the company plans to raise about 10 billion yuan (US$1.2 billion) from the market. The proceeds will be used to fund its acquisition of generators for the Three Gorges project-- the world's largest hydropower plant -- from the parent firm.

The listing, originally scheduled in September, was postponed by the market regulators at the last minute. The regulators feared the huge fund-raising exercise would drain too much cash from the market which had already saddled with a tightened liquidity after a slew of large share offerings in previous months.

Lu yesterday said in an interview that it is "less likely'' for the company to revise its current flotation scheme, including the scale of fund-raising.

But the exact time of the listing depends on market conditions and whether there are government policies to underpin the stock market.

The China Yangtze Three Gorges Project Development Corp plans to use the sale of its four hydropower generators to fund the construction of the remaining 22 generators of the Three Gorges project and repay debts.

Although the listing has been delayed, Lu said his company has not been damaged because it has a healthy enough cash flow.

The company has already reaped profits from the operation of its first four generators which started to make electricity this summer.

Another two generators are likely to commence operations ahead of the time by the end of the year.

Lu said they may increase the power generation this year to 7 billion kilowatt from the original plan of 6 billion kilowatts as a result of the operation of additional generators and the rising water level.

Electricity generation is expected to reach 10 billion kilowatts next year with another two generators starting to operate, he said.

The company has sold 6 billion kilowatts of electricity to local users at an average price of 0.25 yuan (3 US cents) per kilowatt hour.

The company will negotiate with local users for an additional 10 billion kilowatt-hours.

Lu said the electricity from the Three Gorges is competitive in the market because the average price of electricity generated from coal is 0.3-0.35 yuan (3.6-4.2 US cents) per kilowatt-hour.

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