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China plans to break up the State Power Corporation, the virtual monopolist in the sector, into several power generation and grid groups before the end of this year, sources said.
"The power generation and grid groups and the State Electricity Regulatory Commission - the industry watchdog - will be officially launched before the end of December," a reliable source has told China Daily.
State-owned power companies were informed of the reshuffle plan and personnel appointments yesterday afternoon.
In April, the government said it planned to break up the generation of assets of the State Power Corporation into four or five groups that can compete with each other. The corporation was also expected to give up its grid assets in southern China provinces to form a new grid company.
The corporation controls half of the nation's power plants and almost all power grids. It has assets of 1.8 trillion yuan (US$213 billion) at the end of 2000, accounting for 72 per cent of the country's power assets.
But since the reshuffle plan was made public, absence of concrete reform measures has prompted people to worry about the feasibility of reforms.
The Hong Kong media reported yesterday that Gao Yan, former head of the power corporation, "has fled the country to avoid arrest on corruption charges".
An official with the corporation yesterday declined to comment on the reports, only saying that details of the reforms "are likely to be unveiled next month".
He also confirmed that Chai Songyue, former governor of Zhejiang province, will head the proposed State Electricity Regulatory Commission.
An official with the State Development Planning Commission (SDPC), which drafts blueprints for the reforms, also reiterated the government determination to push ahead with reforms in the power sector.
"The reforms are progressing well as scheduled," said the official who declined to be named.
Analysts said the reforms could benefit the industry in the long-run, and provide opportunities for independent power plants - such as Huaneng International, Beijing Datang and Shandong Power - to acquire State Power assets for expansion. But the reforms may also intensify the competition in the industry, and squeeze the profits of power companies, they said.
(China Daily Hong Kong Edition October 17, 2002)
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