Thermal power companies have seen an improvement in profit margins this year, thanks to the decline in coal prices, but still face significant losses.

 

Datang International Power Generation Co., Ltd., a Shanghai-listed subsidiary of China Datang Corporation Ltd. (Datang Group), reported approximately 65% of loss in its coal power segment in the first three quarters, despite a profit of around 500 million yuan ($70.27 million) in the thermal power segment.

 

Datang International Power, which operates in 19 provinces and regions throughout China, is engaged in power generation business, primarily thermal, hydro, wind, and photovoltaic power. Despite its efforts in recent years to invest in renewables projects, thermal power still accounts for over 70% of the business as of the end of June this year.

 

Datang International Power, one of the five listed companies under Datang Group, owns Datang Tuoketuo, the world's largest operational coal-fired power plant.

 

Meanwhile, Datang Huayin Electric Power Co., Ltd. is one of the largest and longest-standing power generation companies in Hunan province, holding a significant position in the provincial power system.

 

In recent years, thermal power companies, represented by Datang International Power, has been facing operational challenges, owing to high coal prices.

 

In 2021, Datang International Power incurred the worst ever loss of about 9.26 billion yuan, while Huayin Electric Power recorded a loss of around 2.27 billion yuan. In 2022, Huayin Electric Power achieved a small profit, but Datang International Power still suffered a loss of around 410 million yuan.

 

As of the end of 2022, Datang Group had the highest debt ratio among major power generation groups in China, standing at 71.98%. The group has acknowledged that the high debt ratio greatly increased its financial cost and long-term debt repayment pressure, and exacerbated financial and operational risks.

 

To reverse the difficult situation in the thermal power sector and reduce the debt level, Datang Group has been seeking long-term coal supply contracts and coal power cooperation.

 

The group has approached four coal mining companies since late October, including Shaanxi Coal and Chemical Industry Group Co., Ltd., Jinneng Holding Group Co., Ltd., Shandong Energy Group Co., Ltd. and Huaihe Energy Group Co., Ltd., focusing on ensuring energy supply and deepening medium- and long-term cooperation on power coal.

 

Last year, several power generation companies under Datang Group were transferred to Shaanxi Coal and Chemical Industry Group, unifying ownership and management.

 

Datang Group hopes to seek continued support from other companies in coal supply for the upcoming winter peak demand, deepen strategic cooperation and explore innovative collaboration. The aim is to achieve mutual benefits and contribute to national energy security and sustainable development, it said.