Shanghai Electric Power Co. Ltd. plans to terminate a project that was supposed to provide “green” energy in China’s Xinjiang region but instead discharges polluted wastewater.
In a Dec. 28 filing to the Shanghai Stock Exchange, the company said that owing to the malfunction of an exhaust gas purification system, the operation of its Hami Xuanli Gas Power project had improperly discharged a considerable amount of wastewater containing phenol, or carbolic acid.
The state-owned utility said it had decided to shut the project and dispose of related equipment.
Hami Xuanli was started for the purpose of “utilizing the exhaust gas emitted by coal tar in an Industrial Cluster Park, and through combined gas and steam turbines to generate electricity,” according to a 2014 official introduction to the project.
The utility said that after on-site inspections in 2021, a team of external experts concluded that the purification facilities needed large-scale renovation to meet environmental requirements. However, they concluded that “it is costly, and the effect remains uncertain.”
The project’s losses will cost Shanghai Electric Power $91 million in impairment provisions, said the exchange filing, adding that apart from the $47 million impairment for Hami Xuanli Gas Power Generation Co. Ltd., there is also a $44 million impairment for another subsidiary, Luojing Gas Turbine Power Plant.
Luojing Power Plant leased facilities linked to the project. Its facilities will be dismantled since they are non-standard and cannot be used in domestic power plants of the same type.
The Shanghai-listed company’s stock declined sharply on Dec. 29, the last trading day of 2021.
The project was approved in 2014 by the Xinjiang Production and Construction Corps, also known as XPCC or Bingtuan (“The Corps”).
“The major goal of the project is to make maximum use of the exhaust gas produced by the industries in the park, while also purifying the gas to fulfill environmental protection regulations,” project manager Xu Jihui said in May 2020, according to bingtuan.com.
In the report, the state-run outlet covered a groundbreaking ceremony held by XPCC for Hami Xuanli’s second gas station, adding that the project is to “further relieve the industrial park’s pollution condition, and move forward with high-quality development while preserving the park’s efficient and green environment.”
China is the world’s largest carbon emitter. The Chinese regime said that its country’s carbon emissions will peak in 2030, and then begin to fall, with the objective of reaching carbon neutrality by 2060. The regime has argued that China is still a developing economy and should not be held to the same standards as developed countries in terms of cutting carbon emissions.
XPCC is a unique state-owned economic and paramilitary entity in the Xinjiang Uyghur Autonomous Region that is subordinate to the Chinese Communist Party (CCP). The U.S. Treasury Department sanctioned the entity in 2020 for human rights violations.
On Dec. 23, U.S. President Joe Biden signed into law legislation that bans all imports from the Xinjiang region over concerns of forced labor.
The Uyghur Forced Labor Prevention Act is part of the United States’ response to Beijing’s treatment of China’s Uyghur minority, which Washington has called genocide.
In 2020, Shanghai Electric Power Co. settled $66 million in asset impairment for the Hami Xuanli project because of pollution, according to local outlet Time-Weekly.com.