form6k.htm
FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
the month of April, 2009,
(Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.)
Form
20-F X
Form 40-F _____
(Indicate
by check mark whether the registrant by furnishing the information contained in
this form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934. )
Yes
____ No X
(If
"Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g3-2(b): 82-__________. )
N/A
Huaneng
Power International, Inc.
West
Wing, Building C, Tianyin Mansion
No.
2C Fuxingmennan Street
Xicheng
District
Beijing,
100031 PRC
This
Form 6-K consists of:
An
announcement describing fuel costs hedging instruments used by Tuas Power Ltd.,
a wholly owned subsidiary of Huaneng Power International, Inc. (the
“Registrant”), made by the Registrant on April 24, 2009.
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the under-signed, thereunto duly
authorized.
HUANENG POWER INTERNATIONAL,
INC.
By /s/ Gu
Biquan
Name: Gu Biquan
Title: Company
Secretary
Date: April
24, 2009
Hong
Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited
take no responsibility for the contents of this document, make no representation
as to its accuracy or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance upon the whole or
any part of the contents of this document.
(a
Sino-foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock
Code: 902)
Overseas
Regulatory Announcement
This
announcement is made pursuant to Rules 13.09(1) and (2) of the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
Tuas
Power Ltd. (“Tuas Power”), a wholly-owned subsidiary of Huaneng Power
International, Inc. (“HPI”), was incorporated in Singapore in 1995. It was
acquired by HPI in 2008. Tuas Power mainly engages in electricity generation and
retail. It has an installed capacity of 2670 MW, representing about 26% of
Singapore’s total installed capacity. The fuels consumed in its power generation
are imported and settled in foreign currency, thus exposing fuel costs to
international oil prices and foreign exchange rate fluctuations. In order to
maintain stable operations and business performance, Tuas Power uses financial
derivative instruments to hedge against such risks.
The
approaches used in Tuas Power’s fuel costs hedging are dependent on its channels
of electricity sales. The majority of its electricity sales are contracted in
advance on fixed-term basis. The electricity sales price is usually pegged to a
benchmark oil price future index and foreign exchange rate as agreed. Based on
the agreed terms of the contract, Tuas Power would buy the financial derivatives
against the referenced oil price index and forward foreign exchange rate, so as
to manage the risk exposure and protect its future margin to be derived from
these contracts.
Tuas
Power uses fuel swap and foreign exchange forward transactions, both conducted
over the counter, to respectively lock-in the future oil prices and foreign
exchange rates. A fuel swap contract means that the buyer collects from (when
the actual price is higher than the strike price) or pays to (when the actual
price is less than the strike price) the seller the difference between the
strike price (the prevailing forward price at the time of entering into the
contract) and the actual spot market price when the financial derivative
contract matures. A foreign exchange forward contract means that the buyer buys
the foreign exchange from the seller at the agreed exchange rate (the forward
rate at the time of entering into the contract) upon the expiration date of the
contract.
In the
execution of the electricity sales contract, if the actual oil price is higher
than the original forward oil price, Tuas Power will pay higher fuel costs for
purchasing fuel in the spot market. However, this higher cost is offset through
the gain on the fuel swap contract. In this way, the contracted electricity
sales margin is protected, and vice versa. This hedge against spot market price
risks using derivatives has proven to be effective in protecting the contracted
margin. Similarly, when it pays for the procurement of fuel or settles the fuel
forward contracts, Tuas Power would execute the corresponding forward exchange
contracts, by purchasing the required amount of foreign currency and thus
effectively managing the fluctuation of exchange rate and its possible impact on
the contracted margin.
Tuas
Power has an integrated, stringent and effective risk management control system
to carry out the transactions of financial derivatives. The duties and
authorities are clearly segregated among the Board of Directors, Management and
the operational teams. The Board of Directors reviews and approves the risk
policies, including the selection of counterparties, scope of trading as well as
delegation of authority to management and operational teams. A Fuel Management
Steering Committee that comprises of key management staff, including Chief
Executive Officer, Senior Vice President in charge of trading and Financial
Controller, is charged with formulating hedging strategies, identifying
financial derivatives products to manage the risk exposure, setting trading
limits, monitoring credit rating of counterparties, and reviewing variance of
fair value. There is clear segregation of duties among the Fuel Management, Risk
Management and Finance departments. While the Fuel Management carries out the
execution of the hedging strategies, Risk Management would ensure policies are
complied with and limits are adhered to, and Finance Department focuses on
contracts administration and settlement.
Tuas
Power has been using derivative instruments to hedge against fuel cost risk for
the past eight years. Such hedging
activities
have played an important role in maintaining stable operations and business
performance. Other power generation companies in Singapore electricity market
are also believed to have adopted similar hedging strategies and financial
instruments to hedge against the fuel price risk. And the hedging business is
also one of the core elements of the market-oriented system of electricity
market of Singapore.
|
By
Order of the Board
Gu Biquan
Company
Secretary
|
As at the
date of this announcement, the directors of the Company are:
Cao
Peixi
(Executive
Director)
Huang
Long
(Non-executive
Director)
Wu
Dawei
(Non-executive
Director)
Huang
Jian
(Non-executive
Director)
Liu
Guoyue
(Executive
Director)
Fan
Xiaxia
(Executive
Director)
Shan
Qunying
(Non-executive
Director)
Xu
Zujian
(Non-executive
Director)
Huang
Mingyuan
(Non-executive
Director)
Liu
Shuyuan
(Non-executive
Director)
|
Liu
Jipeng
(Independent
Non-executive Director)
Yu
Ning
(Independent
Non-executive Director)
Shao
Shiwei
(Independent
Non-executive Director)
Zheng
Jianchao
(Independent
Non-executive Director)
Wu
Liansheng
(Independent
Non-executive Director)
|
Beijing,
the PRC
24 April
2009
2