China to allow foreign firms to invest in power
Dec 14, 2007 - XFN-ASIA
BEIJING: China will allow
foreign companies to invest in the construction
and operation of the country's power grid for the
first time, the country's top economic planner said.
The National Development and Reform
Commission (NDRC) said power grids have now been
listed on the 'new guidance catalogue' as acceptable
targets for foreign investment.
China now only has two state-owned
grid operators - China State Grid and China Southern
Power Grid - after the reform of China's electricity
sector in 2002, which led to the separation of the
industry into independent power producers and grid
companies beginning in 2002.
However, the reform of China's power
industry is being held back by inadequate grid infrastructure,
according to a recent research report by Fitch Ratings.
Significant financial and political
support is needed to improve the power distribution
system, which is "the biggest challenge for the
Chinese power industry," the report said.
Nui Li, an energy expert at the State
Information Center, said that the move by the NDRC
was made to speed up the construction of power grids
on the mainland, which have been unable to keep
up with the pace of new generators coming online.
This has led to power supply shortages
in some areas, Li said. However, he emphasized that
although foreign firms would be allowed to invest
in power grid construction, mainland companies would
keep the controlling interest as power supply is
a matter of national "economic security".
Many of the large new plants have
been built in western regions, but the failure to
connect the new capacity to the major consumer markets
in the east is another reason for the supply imbalances,
State media reported that that China's
"big five" state-owned power generators have incurred
losses of 4.84 bln yuan in the northwest region
since the end of last year due to the problem.
( 1 usd = 7.4 yuan)