(June 25, 2009) China’s environmental ministry has won its latest battle with influential state-owned power firms after forcing two of them to stop hydropower projects in the southwest province of Yunnan, an official said.

Both Huaneng and Huadian — parents of the Hong Kong-listed Huaneng Power International (0902.HK)(600011.SS) and Huadian Power (1071.HK)(600027.SS) — have stopped construction after an order issued by the Ministry of Environmental Protection, said Wan Bentai, chief engineer with the ministry.

The two firms began building the two massive hydropower facilities — known as the Ludila and Longkaikou and situated on the Jinsha river, an upstream tributary of the Yangtze — without conducting mandatory environmental impact assessments.

But even if the two companies comply with legal requirements, the projects still might not go ahead, Wan warned.

“They will have to wait until the overall assessment of water resources on the Jinsha river is completed,” he said.

Both companies were accused of pushing expensive construction through as quickly as possible, thereby forcing the environment ministry to give the go-ahead or risk accusations of waste, but Wan insisted the projects have now been completely stopped.

“We sent a taskforce to the area to conduct inspections and both projects have already stopped. It isn’t a problem now. All the workers have been withdrawn.”

In 2005, what was then the State Environmental Protection Administration — frustrated by the activities of big state-owned firms — launched “environmental protection storms” against the likes of Huaneng and the Three Gorges Project Corporation.

At the time, Huaneng officials tried to pull rank, arguing that as central-government administered enterprises they were not bound by the environmental watchdog’s rulings.

Although SEPA won that stand-off, activists expressed concern that as soon as the bad publicity passed, the power giants were allowed to carry on as usual.

Despite SEPA’s elevation to a fully-fledged ministry last year, critics still fear it lacks the authority to force the big companies to tow the line.

Wan insisted, however, that every company was treated without fear or favour.

“No matter what size your contribution to China’s economic development has been in the past, if you do not obey the law you will be punished by law,” he said. (Reporting by Beijing newsroom; Editing by Jacqueline Wong)

Reuters, June 25, 2009