China's State Grid denies rumored dismantling

BEIJING -- The State Grid Corporation of China, the country's largest power transmission company, on Wednesday said that contrary to some media reports, it has not received any notice of being dismantled.

"Based on our information from the institutional reform department under the National Development and Reform Commission, there have been no words so far about splitting up the State Grid in the State Council's preliminary plans to boost economic restructuring in 2013," said Jia Fuqing, head of the institutional reform office of the State Grid.

On Tuesday, the China Daily website said a program to dismantle the State Grid was underway, citing the Shandong-based Jinan Daily.

"The power grid is a natural monopoly, relying heavily on scale economical profits. Only based on this can we talk about splitting it up or not," said Zeng Ming, a professor with the North China Electric Power University.

Otherwise, large monopolies would end up as mini-monopolies, followed by problems with low efficiency, asset losses, safety risks and pollution, Zeng said.

Lin Boqiang, head of the China Center for Energy Economic Research with Xiamen University, said in its previous reforms in 2002, China had split its power transmission operator into two parts -- the State Grid and China Southern Power Grid, but the two have failed to build a competitive pattern.

"In this way, further dividing the State Grid would be of little significance. Instead, it may bring about regional monopolies and higher reform costs for residents," Lin said.

The core of the current reforms should be streamlining the relationship between sellers and consumers, Lin said, offering fixing the electricity pricing mechanism as an example.

The State Council has declared its plan to restructure the National Energy Administration (NEA) by streamlining the functions of the NEA and the State Electricity Regulatory Commission.