China to break up state power giant

Ulhas Joglekar uvj at vsnl.com
Fri Apr 6 06:19:18 MDT 2001


Tuesday
3 April 2001

China to break up state power giant
BEIJING: China will break up its state-owned power behemoth in an ongoing
bid to spur competition and to offload government shareholdings in the
sector, the official China Daily newspaper said on Monday.
State Power Corp (SP), which owns all of China's high-voltage grid assets,
will be stripped of its power generation assets in preparation for a
possible overseas listing as the country's sole grid operator, the paper
said.
State Power's generating assets -- which make up half of the country's total
power plants -- will be split into regional power generating companies that
are likely to seek separate stock market listings.
"A raft of power company listings is foreseeable," said Wang Jun, director
of the State Development Planning Commission's power department.
Premier Zhu Rongji said in March that China would draft new laws to
facilitate the break up of monopolies in industries such as power,
telecommunications, civil aviation and railways.
The reforms aim to help China establish a more market-oriented economy as it
prepares for entry to the World Trade Organisation, expected later this
year.
By bringing individual power producers to the stock markets, the Chinese
government aims to spur competition in the heavily monopolised sector and
reduce its stakes in the businesses at the same time.
With its exclusive power transmission rights and ownership of half of
China's power plants, State Power has left little room for independent power
plants to compete, the paper said.
If the government sold half of its shares in the power sector -- with 800
billion yuan ($96.4 billion) in assets -- it could raise up to 400 billion
yuan ($48.2 billion) in cash sorely needed to supply the country's social
security fund, said Hu Angang, director of the Chinese Academy of Sciences'
Research Centre for China Study.
Each proposed power generating company would take a stake in separate power
plants to avoid a monopoly in any region, Wang said. (Reuters)
 For reprint rights:Times Syndication Service






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