Foreign Projects in China’s Power Industry: Tariff Reductions and Renegotiations

A tariff differential arising through differences in returns and costs between foreign-invested plants and local plants has been the cause of much suffering for foreign investors. The resulting pressure for tariff reductions and/or renegotiation of power purchasing agreements is affected by the erosion of the value proposition justifying higher tariffs, the availability of legal recourse, and the presence of “soft” sanctions in the system.