It is reported that Hubei Energy Group intends to start a large-scale coal-chemical project in Inner Mongolia, and according to local regulations, it will be allotted two billion tons of coal, which will help to ease the situation of coal shortages and high coal prices faced by the company's thermal power generation business.

Hubei Energy Group plans to obtain additional thermal power generation capacity of four million KW during the 12th Five-Year Plan period.

Mr Xiao Jianghong Company chairman said the thermal power generation business, which had been reporting poor performances, accounted for 50% of total revenue in the past two years. He said that the thermal power generation business lost about CNY 300 million in 2011.

He added that the coal-chemical project will help the company develop a new business and ensure stable coal supplies after it is put into operation and Hubei Energy Group will invest in the thermal power, hydropower, wind power, solar power and biomass energy businesses.

According to the report, the company has completed the procurement of the equipment to be used for the second phase of the Qiyue wind power plant in Lichuan, Hubei and will start construction at the end of March.

Hubei Energy Group previously issued a profit warning. It forecasts a 37.34%YoY to 46.021%YoY decline in 2011 net profit to between CNY 560 million and CNY 650 million.

(Sourced - China Securities Journal)

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