The management of a second batch of power generating assets
owned by State Grid Corp of China has been transferred to
electricity producers, paving way for an eventual sale and making
the firm a pure distributor as part of an industry reform.
As of Sunday, the power-producing companies are responsible for
safety operations and management of eight power plants in which
State Grid owned a combined equity generating capacity of 6.47
gigawatts. The State Electricity Regulatory Commission said
yesterday this marks the completion of the "main work" in the asset
disposal. Other areas still to be done include deal signing,
transaction and registration.
State Grid, China's dominant power distributor, retained certain
generating assets in 2002 during the breakup of the former State
Power Corp into five national power producers and two grid
operators. It had completed the sale of combined 10.8GW in the
first phase of the sale in May to 31 companies, raising 18.7
billion yuan (US$2.5 billion), or 56 percent higher than the book
value.
Unlike the first phase sale, made through open tenders which
allowed foreign and domestic private bidders, the second sale was
mainly limited to the five national power producers, plus China
Shenhua Group and Hunan-based Xiangtou Holdings Group, to maintain
a smooth transfer and for the sake of protecting the value of state
assets, SERC said.
The second batch of assets for sale are considered more
attractive than the first as the firms have better profitability
given their larger unit capacities. Pricing of the second batch of
assets remains a key issue now, with SERC saying it would be
decided by market forces with a premium.
"As they are better quality firms, they should enjoy a premium
higher than 56 percent," said an analyst wishing not to be named.
"But since it's not an open tender and off limits to foreign and
private sectors, the premium could be quite small."
A SERC official said the transaction should come soon.
Proceeds from the sale are intended to finance grid construction
and to spin off other non-core business from the grid.
(Shanghai Daily December 25, 2007)
