China Ocean Shipping Co. (COSCO), the nation's largest shipping company, entered into a strategic partnership over the weekend with Huaneng Power Group, the top Chinese electricity producer, to become Huaneng's long-term carrier.

The move came as Chinese companies are seeking to secure material supplies and goods transportation amid tight demand for shipping.

The partnership is similar to the contracts that COSCO signed with Baosteel, Sinopec and Haier in March, June and this month, respectively.

According to the framework agreement between COSCO and Huaneng, the shipping company will offer quality and price-competitive transport and logistics services to the power producer on a long-term, international basis.

Huaneng will appoint COSCO as its major marine carrier of coal and other raw materials.

"The marriage between Huaneng and COSCO will help each grow stronger in its respective sector," said Li Xiaopeng, general manager of Huaneng.

The company plans to increase capacity by at least two-thirds by the end of 2008 to meet power shortages triggered by the nation's blistering economy and fixed-asset investment.

It wants to build 12,200 megawatts of installed capacity from 2004 through 2008.

It is reported that the power producer has signed long-term coal deals spanning three to five years to sustain its production.

COSCO will help deliver the raw materials such as coal that Huaneng needs. According to COSCO President Wei Jiafu, detailed co-operation plans will be worked out in a few months.

"The partnership framework offers a good basis for future co-operation," he said. "We will enter into specific co-operative projects in the spirit of the partnership."

Apart from transportation services, the two industrial leaders also promised to team up to explore other sectors.

They would study the feasibility of co-operating in such areas as international trade and financial services.

They also have the intention of forming joint ventures to enter into coastal cargo delivery businesses.

Source: Shenzhen Daily/Agencies