Shanghai Daily | 上海日报 -- English Window to China News

SHENZHEN Energy Group Co, partly owned by Huaneng Power International Inc, halted a plan to buy shares in a Shenzhen generator on concerns about hedging contracts the southern China company has with Goldman Sachs Group Inc, Bloomberg News reported yesterday.

Shenzhen Nanshan Power Co's oil-hedging contracts may contain risks, Shenzhen Energy, 9 percent owned by the unit of China's biggest power producer, said in a statement to the city's stock exchange. The company suspended buying Nanshan shares to protect shareholders interests, it said.

Shenzhen Energy said in August it planned to buy Class-A and Class-B shares in Nanshan for about 621 million yuan (US$90 million). Trading in Nanshan shares has been halted since Friday after regulators alleged the contracts bought from Goldman's Singapore unit didn't pass "proper decision-making channels, failed disclosure rules and violated state laws."

The company was evaluating possible risks that would arise from contracts, Nanshan said in its statement.

The power company had signed two contracts with Goldman based on oil prices ranging from US$62 to US$US66.50 a barrel.