Bloomberg News

China Halts Approval of Some Power, Steel Projects on Pollution

January 10, 2007

China stopped approving projects by power and steel producers, including Datang International Power Generation Co. (991), and Baotou Iron & Steel Group Co., in provinces, where the companies violated environmental rules.

The government found 82 projects in 22 provinces with a total investment of 112.3 billion yuan ($14.4 billion) that failed to follow regulations on pollution, Pan Yue, vice minister of the Beijing-based State Environmental Protection Administration, said on its Web site today. The government won't approve companies' projects in these provinces until the violations are rectified, it said.

China, the world's biggest energy user after the U.S, wants to conserve resources and reverse a trend of environmental degradation that has accompanied the nation's economic expansion. The government has ordered the closure of small coal mines and inefficient plants to curb pollution.

``It's the first time in 30 years that we're using the administrative measure of project approvals on companies that break environmental rules,'' Pan said.

Datang Power failed to close five 50-megawatt generating units at its Tangshan power plant in Hebei province by Dec. 31, the administration said. The agency won't approve Datang Power's projects in Tangshan until the company closed the units, it said.

Huaneng Group, China's biggest power producer, didn't shut two 75-megawatt generating units and add desulphurization equipment to one 100-megawatt unit at a plant in Inner Mongolia, the administration said. The agency will halt approvals of Huaneng Group's power projects until the company shut the units and added the equipment, it said.

Huadian, Guodian

Power producers China Huadian Corp. and China Guodian Group Corp. will also be penalized after failing to shut plants and add desulphurization units, it said.

China failed to meet a government target to cut the amount of energy used to produce each unit of gross domestic product by 4 percent this year, Pan said.

China aims to cut the amount of energy used to produce each unit of Gross Domestic Product by 20 percent in five years, and 4 percent this year, the government said in March.

``China faced the most challenging environmental issues in 2006,'' Pan said. ``The environmental problem is becoming a core bottleneck that is hindering China's economic and social development.''

To contact the reporter on this story: Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net.

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net


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