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Chinese electricity firms gain on Beijing six-year spending plan

Beijing wants the country's average automated power distribution rate to rise to 90 per cent from 20 per cent. Photo: Bloomberg

Shares of power distribution equipment makers in China have risen after the energy regulator announced a power distribution infrastructure spending target of two trillion yuan for the six years to 2020 as part of Beijing's measures to support economic growth.

The target for this year has been set by the National Energy Administration at 300 billion yuan, which is double the 150 billion yuan spending last year as estimated by analysts at SWS Research and Ping an Securities.

"Building reliable, efficient, advanced power distribution networks can boost investment, upgrade manufacturing industries and support the internet-plus development strategy," the circular said. "It will be a key for stabilising growth, inducing reform, adjusting [economic] structure and improving lives."

The administration said the investment will help realise its target to lower power cuts for an average inner city household to one hour in 2020 from 4.4 hours last year, that of township families to 10 hours from 17.5 hours and that of rural homes to 24 hours from 74 hours.

It has also set a goal for the average automated power distribution rate to rise to 90 per cent from 20 per cent, and for the installation rate of meters that can collect demand data to rise to 90 per cent from 60 per cent.

In Hong Kong, shares of Jiangsu-based electrical distribution equipment and software supplier Boer Power gained up to 3.8 per cent and closed 0.2 per cent higher at HK$12.72. Shenzhen-listed rival Zongyeda Electric gained up to 5.7 per cent but closed 0.4 per cent lower at 12.68 yuan.

Still, analysts said spending by the two state-owned power distribution monopolies has been running behind budget this year amid the anti-graft campaign.

Power grid investment, which was supposed to rise based on the firms' budgets and takes up half of the nation's copper consumption, fell 10 per cent year on year in the year's first half, according to an ANZ report.

Li Chunlan, senior consultant at commodities consultancy CRU, said the spending plan is positive for copper demand since most cables used in distribution networks are copper-based.