China Power Investment Group, one of the nation's five largest electric companies, plans to issue 15-year bonds to raise 3 billion yuan (US$360 million) to fund the construction of four hydropower stations.

It is the first time a power company raises money on the bond market this year, the company said in a statement.

The bond offering only partly reflects power companies' need for money to fuel an ongoing investment spree in the industry. Companies are scrambling to build new generators to cash in on the current electricity crunch that is expected to last for at least two more years.

The bonds bear an annual coupon of 5.02 per cent. It is the highest coupon interest rate for a 15-year corporate bond since last February when the central bank reduced the interest rate.

The statement said public issuance will start from December 8, and China Galaxy Securities Co is the underwriter.

All the process will be used to finance the construction of four large and medium-sized hydropower stations. The projects will cost about US$2 billion.

Three of the stations will be Located in Central China's Hunan Province and the other on the upstream of Yellow River in Northwest China's Qinghai Province. The hydropower stations will have a total generating capacity of 2,960 megawatts upon completion.

Li Xiaoling, the company's deputy managing director, said the investment provides an attractive profit return as the areas lack enough electricity supply.

"The investment is also strategically important for the company to optimize its asset configuration,'' said Li Friday at the press conference.

Hydropower accounts for nearly a quarter of the company's total generation capacity of more than 30,000 megawatts, while the coal-fired generators make up 70 per cent. The balance comes from renewable energy such as nuclear power.

China Power Investment Group has generating assets in 17 provinces and regions in China. It also has four domestic listing subsidiaries.

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