Monday, May 9, 2011

China Three Gorges Water Levels Falling Faster Than Expected

China Three Gorges Water Levels Falling Faster Than Expected
By Bloomberg News - May 9, 2011

China Three Gorges Corp. said water levels at the world's biggest
hydropower dam are falling faster than expected after flows from
upstream on the Yangtze River this month were 40 percent less than in
the previous three years.

The water level behind the Three Gorges dam may fall to less than 155
meters after releasing water at a rate of 7,000 cubic meters per second
to ease a drought downstream, the operator of the hydropower station
said in a statement on its website. The government last year estimated
water levels at the dam would reach 155 meters by May 25, according to
the statement.

Falling water levels will cut Three Gorges's power generating capacity
and hurt profitability at its listed unit, China Yangtze Power Co., said
Capital Securities Corp. analyst Lai Shensheng. When the water level is
140 meters to 175 meters, the listed company's profit may be reduced by
0.01 yuan for every 10 meters the level drops, Lai said. Effects become
greater when water levels are below 140 meters, he said.

China Three Gorges's plans to expand generating capacity through 2012
will mean that falling water levels this year won't have a "very big"
impact on Yangtze Power's shares, Lai said by telephone today. He
recommends buying the stock.

Yangtze Power shares rose 0.7 percent at the close of trading in
Shanghai, moderating from earlier gains of as much as 1.6 percent.
China's benchmark Shanghai Composite Index increased 0.3 percent.

--Penny Peng. Editor: John Liu

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