China OKs $1.8 billion in T&D projects

China's National Development and Reform Commission recently approved eight power projects with total investment of $1.83 billion. Of these, six are power transmission and distribution projects, and are all located in Anhui province.

Statistics showed that commission has approved 16 power transmission and distribution projects since this April, involving dynamic investment of $539.8 million, and most of these projects are in central and western provinces in China.

China's transmission and distribution industry is likely to see fast rising prosperity with greater investment in the new round of transmission infrastructure construction, and related companies are expected to see a batch of contracts inked before the end of 2012.

The newly approved transmission and distribution projects are expected to kick off construction in three years, and project operators will purchase equipment from the end of 2012 to beginning of 2013, which will greatly benefit equipment manufacturers, especially power transmission towers and power distributors.

As the newly approved six power transmitting and converting projects are all in Anhui province, Fengfan Power Equipment Co. in Anhui is likely earn power transmission tower contracts. It has maintained as one of the top three equipment providers for five years in the bidding for transmission tower held by the State Grid Corp.

After commission approved the two 330 kV power transmission projects in Ningxia, the Development and Reform Commission of Xinjiang Uygur Autonomous Region recently announced that they would promote several power projects that transmit electric power from Xinjiang to other areas of China.

As investment in power grid has changed from the continuous fast growth in 2006-2010 to steady growth in 2011-2015, the profitability and cash flow of power grid companies are all in relatively good conditions. Under such circumstances, equipment manufacturers are much easier to get payments from power grid companies and also face less bad debt risks. Therefore, large equipment manufacturers could continue their expansion strategy for steady growth in revenue and profit, said BOC International in a research report.

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