China will allocate 19.63 billion yuan (US$2.87 billion) to the state-owned enterprises (SOEs) most affected by two major natural disasters this year, electricity giant State Grid said in Beijing on Friday.
The funds are part of a state budget totaling 54.78 billion yuan released by the State-owned Assets Supervision and Administration Commission (SASAC), a branch of the State Council (cabinet), this week. Distribution details will be announced "soon", SASAC said.
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A file photo of China Southern Power Grid. China will allocate 19.63 billion yuan (US$2.87 billion) to the state-owned enterprises (SOEs) most affected by two major natural disasters this year, electricity giant State Grid said in Beijing on November 28, 2008. |
National electricity suppliers sustained heavy losses during weeks of severe winter weather early this year and in the May earthquake in the southwestern Sichuan Province. The suppliers expected to benefit from the government support include State Grid, China Southern Power Grid, Dongfang Electric (based in the quake zone) and major power plants.
State Grid alone reported 22.45 billion yuan in losses attributable to the disasters. It said it needs about three times that much, or 74.6 billion yuan, to rebuild fully.
China Southern Power Grid said its losses exceeded 20 billion yuan.
Analysts said the budget allocation of less than 20 billion yuan will only cover a small part of the reconstruction cost. The companies will have to raise the remainder themselves. Nevertheless, analysts said, it showed the government's support for SOEs.
The reconstruction allocation accounts for 36 percent of the budget. About half of the financial support, or 27 billion yuan, will reinforce state-owned capital and help key SOEs expand. The remaining 8.15 billion yuan is for SOEs' industrial restructuring, SASAC figures indicate.
As of 2008, China is determining the state-owned capital budget from annual dividends it gets from the SOEs' profit.
This system reflects a change last year that returned the SOEs' financial relationship with the government to pre-1994 rules. Between 1994 and 2007, the SOEs received a budget from the state but weren't required to share their profits.
Under trial regulations issued by the State Council last year, SOEs are classified into three categories for the purpose of sharing profits in the form of dividends paid to the state. The rate for resource-sector companies is 10 percent, while for other SOEs is 5 percent.
Military industry firms don't have to participate in the system for at least three years.
(Xinhua News Agency November 28, 2008)
