Jan. 25, 2007 (China Knowledge) – State Grid Corp. of China, the monopoly power distributor in all but five southern provinces, has forecast a 15.3% surge in the nation's generation capacity and an 11% to 12.5% rise in power demand this year.

These figures increased concerns that China's power construction binge will again result in excess capacity a decade after the previous over-supply in 1998, dashing hopes that the industry's falling plant usage rate will rebound this year.

A senior industry executive blamed the capacity surge on a year-end rush to finish power plants ahead of schedule, as well as a practice of starting plant construction before government approvals were granted, reported the South China Morning Post.

State Grid Corp.’s unaudited net profit jumped 87% to RMB 26.92 billion last year due to increases in end-user charges, said the power distributor in a statement released on Jan. 15. Turnover grew 19.7% to RMB 852.9 billion, while power sales grew 14.2% to 1.7 billion KW-hours, or 60% of the national total.

Looking ahead, the State-owned giant is aiming to increase net profit by 30% to RMB 35.08 billion in 2007. This target is taken into consideration after forecasting a 26.56% increase in expenditure of RMB 202.5 billion in 2007.