(Yicai Global) March 4 -- Chongqing Energy Investment Group has failed to repay CNY915 million (USD141 million) worth of bills due earlier this week, in its first default to date, as the energy supplier is affected by the municipality’s crackdown on dangerous coal mines.

“We did not have the money to repay a CNY685 million (USD106 million) bank acceptance note from Ping An Bank and a CNY230 million letter of credit from the China Zheshang Bank that matured today,” the group, which runs coal, natural gas and electricity projects, said on March 1.

Last year, the Chongqing municipal government ordered all coal mines in the area to be shut down by the end of 2020 after several disasters that claimed many lives. CEIG closed 31 coal mines between 2015 and 2020 and will shut another 14 by the end of June this year, it said earlier. The latest closures will reduce its annual coal production capacity by as much as 1.5 million tons.

The municipality is involved in the handling of the Chongqing, southwestern Sichuan province-based group’s debts, but it is not clear yet if there is any resolution, a member of staff told Yicai Global.

The outlook is not promising. CEIG has interest payments due in July on a domestic CNY500 million (USD77.3 million) private placement plan that will mature in 2023, and another USD500 million worth of senior unsecured notes overseas with a coupon rate of 5.626 percent that will expire in 2022. Its asset-liability ratio stands at 72 percent. As of the end of September 2020, it owed CNY73.9 billion (USD11.4 million) and had total assets of CNY101.9 billion.

US credit rating agency Fitch Ratings downgraded CEIG’s long-term foreign-currency issuer default rating to negative last month from BBB. This is due to a re-assessment of the likelihood of CEIG getting further support from the municipal government, New York-based Fitch said.

In 2019, subsidies from the local government dropped 40 percent from the year before to CNY835 million (USD129 million).

Shares in Chongqing Gas Group [SHA:600917], in which CEIG holds a 41 percent stake, were trading up 0.31 percent at 1 p.m. China time today at CNY6.54 (USD1), unaffected by the default.

Editors: Tang Shihua, Kim Taylor