Meiya Power, the largest western independent power producer in China, has called on the mainland government to improve the investment environment to entice foreign players to return to the country's electricity market.

In an interview with the South China Morning Post on the sidelines of the World Trade Organisation ministerial conference, Colin Tam, chairman of the locally based internationally funded company said a tightening of credit by the government on the power sector meant domestic firms were having a tough time getting financing.

"The banks are changing. Their funding [for the sector] has diminished significantly in the past six months because the regulator is imposing stricter credit analysis [guidelines] on their loan portfolios," he said.

Market-economy disciplines instilled by the planned flotation of state banks are also driving lenders to turn their back on state-guided borrowing and embrace risk and profit-based credit policies.

Another factor contributing to a tougher operating environment is concerns of over-investment, which has seen top industry regulator, the National Development and Reform Commission, step up scrutiny on new project approvals and halt unauthorised projects under construction.

"If you look at the accounting books of the national generation companies, they actually don't meet any credit criteria, such as the debt-to-equity and cash-flow ratios," Mr Tam said.

While their listed subsidiaries do meet the criteria, they will find it difficult justifying investing in new projects under the existing investment environment, he added.

The central government's failure to deregulate power tariffs or let them move fully in tandem with surging coal prices has resulted in a rapid deterioration of sector profits and is the biggest headache facing investors.

For foreign firms, an additional difficulty has been the failure to enforce tariffs and profit guarantees handed out by local governments but not endorsed by the central government.

Some, including United States-based Mirant, Sithe and Intergen have left the mainland market amid worsening operating conditions.

"The old model of the government coming out and announcing tenders for new projects doesn't work any more, because few people would be interested to bid," Mr Tam said.

"We need to have multiple sellers so that the government can get out of the regulatory system [and let the market decide on prices and investment]."

With 64 per cent of its 2,263 megawatt of net total generation capacity on the mainland and the rest in Taiwan and South Korea, Meiya is in talks to invest in wind and waste-to-power projects there and in South Korea.

It plans to launch its initial public offering on the Singapore Stock Exchange in February or March after delaying it in October to complete three planned acquisitions which would not have been allowed under listing rules if it had proceeded with the listing, market sources said.

The company chose to list in Singapore instead of Hong Kong after failing to obtain a waiver from the local bourse to exempt it from rules prohibiting a listing due to a change of major shareholders within a year of its application.