US Power Producer AES Plans China Assets Sale

AES, a U.S.-based power generator with global operations, has kicked off a process to sell all or part of its businesses in China, three sources familiar with the process told Reuters, a deal worth about $300-400 million. 

AES [AES  Loading...      ()   ] , the first American power producer to enter China in the early 1990s, recently hired an investment bank to advise on the sale, the sources said. No other details about the auction were immediately known. 

"It's already in the market," said one source of the AES China assets. 

The sources requested anonymity as they were not authorised to speak to the media. Officials at AES in China and the United States could not offer immediate comments.   

AES's plan to exit China underscores the challenging operating environment of the country's power industry. Coal-fired power producers have little control over electricity prices, which are set by the state. They are unable to fully pass on rises in fuel costs to end consumers. 

AES has 15 plants in China with a combined gross capacity of 2,964 megawatts (MW), and more than 200 employees in the country, according to its website.  

Its China operations include gas and coal-fired plants, hydropower stations and wind power capacity in provinces such as Hebei, Jiangsu, Sichuan and Zhejiang, according to a company factsheet dated November last year. 

Based on the factsheet, the company's share of generation capacity from its ventures stands at 748 MW, including 120 MW of wind power and 525 MW of coal-fired capacity. The remainder are hydropower and gas-fired plants. 

China's sovereign wealth fund China Investment Corp acquired a 15 percent stake in AES for $1.6 billion in 2009. 

It was not immediately clear who would bid for these assets, but overseas producers with relatively large power investments in China include Hong Kong's CLP Holdings [0002.HK  Loading...      ()   ] and Power Assets Holdings [0006.HK  Loading...      ()   ] , which is controlled by Hong Kong tycoon Li Ka-Shing. 

Domestic power companies such as state-controlled Huaneng Power International [0902.HK  Loading...      ()   ] and Datang International Power Generation [0991.HK  Loading...      ()   ] have also been expanding their capacity amid China's rapid economic growth.

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