The Operator is an 85 per cent owned subsidiary of EDFI, with the balance of ownership
held equally by the GPIB, the power purchasing entity of the Guangxi government, and the
Guangxi Investment and Development Company, Ltd.
Background
The need for power
In recent years the PRC has enjoyed one of the fastest growing economies in the world, with
annual GDP growth averaging 12 to 14 per cent and a need to build new power-generating
capacity at a similar rate. In the mid-1990s China ranked fourth in the world in installed gen-
erating capacity but 80th in per-capita energy consumption. About 120 million rural residents
had no access to electricity.^3 Consequently, the country planned to put 35,000 megawatts of
new, independently produced power capacity in place by the turn of the century.
Power plant financing
Prior to the 1990s the majority of power plants in China were domestically owned and oper-
ated, using local technology and equipment. Direct foreign investment was rare and mostly
through joint venture agreements, with projects awarded on a negotiated rather than a com-
petitive-bidding basis; the sale of foreign technology to Chinese power plants was more com-
mon.^4 Between 1979 and 1996 about 10 per cent of investment in the local power sector came
from foreign sources such as foreign direct investment, foreign indirect investment and soft
loans.^5
Shajiao B: the first BOT project
The first BOT power project in China, and indeed in Asia, was the 2 x 350 MW Shajiao B
plant in Guangdong Province, located in an economically strong region near Hong Kong.
This project was negotiated and implemented at the provincial level. It was a joint venture of
Hopewell Holdings Limited (Hong Kong) and the Shenzhen Special Economic Zone Power
Development Company of China. The plant was constructed between 1984 and 1987 by
Consolidated Electric Power Asia (CEPA), a subsidiary of Hopewell Holdings. Hopewell is
an investment, construction and engineering conglomerate controlled by Gordon Wu, who is
considered one of the power industry’s pioneers in Asia. Hopewell raised funds for the pro-
ject, constructed it in 33 months, operated it for 10 years and then transferred it to the Chinese
co-sponsor. The project cost of US$512 million was funded by a combination of shareholder
equity, subordinated loans and debt financing. Most of the debt financing was in the form of
a supplier credit from Japan arranged by Mitsui Corporation and backed by the Export Import
Bank of Japan.
In an article in the Journal of Structured and Project Finance (Spring 2002; formerly the
Journal of Project Finance), Lin Qiao, Shou Qing Wang, Robert L.K. Tiong and Tsang-Sing
Chan cite the following reasons why the Shajiao project succeeded:
- the leadership of an entrepreneur;
- the participation of credible contractors;
- huge demand for electrical power in the project region;
POWER PLANT