Recently, Datang Yuncheng Power Generation Company, Datang Shimen Power Generation Company, Datang Xinyang Power Generation Company, Datang Xinyang Huayu Power Generation Company, and Datang Lueyang Power Generation Company have recently completed the transfer of management rights. The operation and management of the 5 power plants were transferred from China Datang Group Co., Ltd. to Shaanxi Coal Chemical Industry Group Co., Ltd., realizing the unification of controlling rights and management rights. According to the deployment, Shaanxi Chang'an Electric Power Co., Ltd., a subsidiary of Shaanxi Coal Group, established 6 special working groups for handover and 4 special classes for work in the factory to ensure the smooth and orderly development of various tasks during the transition period.

According to data released by the China Electricity Council, due to factors such as the sharp rise in fuel costs, the coal power sector of large power generation groups has overall lost money since August 2021, and some groups’ coal power sector losses from August to November reached 100%. Datang Power’s recently announced performance forecast stated that it is expected to achieve a net profit of about -11.6 billion to -9.7 billion attributable to shareholders of listed companies in 2021 after deducting non-recurring gains and losses. In this context, Shaanxi Coal Group took over 5 power plants in one go, why should they take over? Can you take it? How to pick up?

Aims to turn a profit by 2023

"Lueyang Power Plant was built in the late 1960s, and currently has two 330,000-kilowatt cogeneration coal-fired power plants. Shimen and Xinyang Power Plants were built in the 1990s, and Xinyang's two 660,000-kilowatt units are still the earliest. A batch of ultra-supercritical units put into production. Yuncheng Power Plant was put into operation in November 2007, equipped with 2 × 600 MW air-cooled coal-fired units." An industry insider told reporters that he has investigated 4 of these power plants successively, and his life is generally not easy. . "These power plants are also the main units in the location, and one thing in common is long-term losses. Especially last year, the operating pressure continued to increase with the rise in coal prices."

Another local source in Shaanxi revealed that, as the 5 enterprises that were restructured by Shaanxi Coal Group and Datang Group in 2012, the controlling party was Shaanxi Coal Group. However, due to various reasons, ownership and management rights have been separated for a long time. "The asset-liability ratio of the five power plants is high, and the capital chain is almost broken. It is understood that the primary task after Shaanxi Coal takes over is to reduce debt and promote operations."

The official WeChat account of Changan Electric Power stated: "In the next step, the relevant departments of the group will further strengthen communication with the five power plants, consolidate the group's upstream and downstream industrial chains, give full play to the group's advantages in coal-electricity joint operation, increase the linkage and cooperation between the top and bottom, and seize the last one. 'Welcome to the peak and winter' has marginal benefits and the opportunity to guarantee the national energy supply, ensure the best fuel coal supply, ensure that the generating units can be fully developed, and ensure that the power plants achieve positive cash flow this year and turn losses into profits next year. on target."

An insider of Shaanxi Coal Group said that at present, the workforce of the five power plants is stable, and the safety production is running smoothly. Shaanxi Coal Group's takeover mainly has the following changes: First, through the joint capital injection of the two groups, the financial cost has dropped significantly. Second, it will help to further leverage the advantages of coal-electricity joint operation. The fuel for the five power plants is all supplied by Shaanxi Coal Group, and the cost of power generation has dropped significantly. Third, the ownership and management rights are unified, the management objectives of the enterprise will be clearer, and the effect of coal-electricity joint operation is expected to be fully reflected.

Takeover has evidence and foundation

Due to operating pressure, in recent years, there have been many cases of power plants selling inefficient assets, but it is not common for coal companies to take over power plants across fields. What is the intention of this move? Is it difficult to take over?

"One has difficulties, the other has ideas, and they hit it off. The approach is also in line with national policies. The "Notice on Doing a Good Job in Resolving Overcapacity in Key Areas in 2020" issued in June 2020 proposed to support coal enterprises in the construction of pit-head power plants and power generation enterprises. Coal mines are encouraged to develop coal-electricity joint ventures through integrated operations, equity cooperation, etc. Shanxi, Shaanxi, Hunan and other places where the power plants are located are all provinces with overcapacity in coal power generation. Select a power plant in each region to transfer management rights and demonstrate The effect is obvious." The above-mentioned people regard it as a "deep attempt" of coal-electricity joint venture, which reflects the pragmatic and open-minded attitude of Datang Group, as well as the maturity and confidence of Shaanxi Coal Group in power management.

Xing Lei, director of the Research Center for Listed Coal Companies at the Central University of Finance and Economics, believes that coal companies have evidence and basis for taking over power plants. "Similar models have successful cases. For example, Tongmei Group took over Zhangze Power, which was once considered difficult to get out of the predicament by the outside world, but the follow-up development has proved to be very good. Guohua Jinjie Power Plant, a subsidiary of the National Energy Group, has a coal mine. Blessing, even if the coal price rises, it can still be profitable. Shaanxi Coal has already operated the power sector and has accumulated a certain experience, coupled with the rational allocation of coal resources from the inside, to solve the difficulty of fuel supply, and to turn losses into profits is hopeful.”

"However, these power plants have been operating for a long time, and the burden is correspondingly heavy. For example, when transferring from a central enterprise to a local state-owned enterprise, will there be resistance among the personnel, and how to make a smooth transition?" Xing Lei also reminded that it is necessary to properly solve asset disposal, personnel placement, etc. Reality. Niu Dongxiao, academician of the International Eurasian Academy of Sciences, said that electric power, as a technology-intensive industry, has high professional requirements. The operation of coal-electricity joint venture power plants is more complicated. It is necessary not only to understand the coal business, but also to master the power generation specialty, which is a test for daily management and workforce.

Coal-electricity joint venture is no longer simple to match

Shaanxi Coal Group took over 5 power plants and attracted much attention from the coal and power industries. In the eyes of many people, this move is a substantial step in the "ice-breaking journey" of the coal-electricity joint venture.

Yuan Jiahai, a professor at North China Electric Power University, said that although coal-electricity joint ventures have been encouraged by policies, they have not been able to get rid of the administrative method for a long time. "This time, the market behavior of the two sides is a good attempt, which can realize the effective integration of resources. For example, the 'two lakes and one river' area is difficult to transport, the coal price is high, and the power plant in Hunan suffers serious losses all year round. Shaanxi Coal Group has the ability to ensure fuel supply through the Haoji Railway, and promote the solution to the problem of cost and electricity price inversion. In turn, it is impossible for any party to have a long-term success. Shaanxi Coal Group is also multi-point layout, looking for a relatively stable market space for its own coal. In the future, once the coal operation situation declines, we can turn cheap coal into more value-added electricity, and the power plants and coal mines are our own, and we can better control costs internally.”

According to the reporter's understanding, the original intention of the coal-electricity joint venture policy is to internalize the external coal and electricity conflicts through strategic cooperation, mutual shareholding, asset integration, etc. The smooth fluctuation of industry profits has alleviated the contradiction between coal and electricity to a certain extent, and the number of related projects has also increased in recent years. However, the actual results are not satisfactory, and there are very few projects that actually maintain profitability.

"Under the current situation, it is more necessary for coal enterprises and power generation enterprises to be closely linked to amplify their respective advantages and work together to improve their competitiveness. However, we advocate joint management of the industrial chain, maintain stable development and operation, and jointly create new profits, rather than One party fights alone." Niu Dongxiao also said that alleviating the fuel pressure does not mean that the cost of coal power production is not considered. In the follow-up operation, coal enterprises should also do a good job in internal cost management, and strengthen research to understand the electricity price policy. Editor/Sang Xiaomei