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The State Power Corp's virtual monopoly came to an end yesterday with the establishment of five independent electricity generating and two transmission companies.
The five generators have an equal share of the generating assets of State Power, which used to control half of the nation's electricity generating assets and almost all transmission grids.
The government hopes the big five companies - China Huaneng, China Datang, China Huadian, Guodian Power, and China Power Investment - will compete to sell their electricity across the nation, in an attempt to improve efficiency and lower electricity bills.
On the transmission front, the State Power Corp of China, a pure grid company now, also split some of its power grids to form the Southern Power Grid Co. The Southern Power Grid manages the grids in the southern provinces and regions of Guangdong, Hainan, Guangxi, Yunnan and Guizhou, while State Power controls grids in the rest of the nation.
Four consultant and construction companies were also split yesterday from State Power to make them more efficient.
After heated debate lasting two years, the sweeping reform marks another blow from the government this year on some monopolized industries, following the dismantling operation in the telecom and aviation industries earlier. These sectors absorb State-owned assets worth more than 1 trillion yuan (US$121 billion).
"The launch of the companies introduces competition (in the sector)," said Zeng Peiyan, minister of the State Development and Planning Commission (SDPC), which took the lead in the reform process.
"It means that China's power industry moves a new stage towards a market economy."
Meanwhile, a ministrial-level industry watchdog, the China Electricity Regulatory Commission, is expected to be founded soon, in what analysts called a major breakthrough for the sector.
As the first ever supervisory body for public utilities, the commission is supposed to put in place industry rules, and suggest electricity tariffs to the SDPC.
(China Daily December 30, 2002)
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