Energy costs to hit SOE profits

Source: Xinhua  |   2008-12-21  |     NEWSPAPER EDITION

PROFITS from China's state-owned enterprises (SOEs) administered by the central government are expected to drop 20 percent from last year because of higher energy prices.

The central SOEs would earn a total of 800 billion yuan (US$117 billion) this year, compared with 1 trillion yuan in 2007, said Wang Xiaoqi, head of the planning and development bureau with the State-owned Assets Supervision and Administration Commission (SASAC) on Friday.

Wang said most of the loss came from the petroleum and electricity industries, which suffered under the government-capped pricing system.

The country's five largest power generators, including China Huaneng Group, China Datang Corp and China Guodian Corp, may post a combined loss of 55 billion yuan this year because of the gap between steep coal prices and state-set electricity prices, he said. The global financial crisis had also eroded earnings in the SOEs, Wang said.

The central SOEs reported a sharp profit decline of 26 percent in the first 11 months of the year, according to SASAC statistics. Combined profits stood at 683 billion yuan from January to November.