New firms in power industry restructuring

Insiders: The two companies likely to be in the world's top 500

BEIJING - The government is to establish two new companies from the design and construction businesses of the power grid groups in a long deliberated move to restructure the power industry.

"Splitting the affiliated businesses from the power grid groups is an important step in restructuring the power industry," said Shao Ning, vice-chairman of the State-owned Assets Supervision and Administration Commission (SASAC).

Shao said the move will enable the power grid companies to focus on their main businesses and produce more accurate accounting.

The two new companies, namely China Power Construction Group Co Ltd and China Energy Engineering Group Co Ltd, will focus on exploration, design and construction, according to a statement released by SASAC last Thursday.

The total assets and annual profits of the two new companies will be more than 100 billion yuan ($15 billion) after the restructuring, said Wang Yong, chairman of SASAC.

"Their scale and abilities will put them at the top of the industry among all the power companies," Wang said.

Some industry insiders predict that the scale of the two new companies mean they will be among the world's top-500 companies.

The companies will participate in the construction of large-scale coal-fired power plants, nuclear plants and clean energy power plants, as well as other transportation and infrastructure investments and opportunities overseas.

However, experts say there is still a long way to go to complete the restructuring of the industry and power generation, equipment manufacturing and power transmission should also be separated from the groups.

"But separating the electricity equipment construction companies from the power grid groups is still proving a difficult problem to solve," said Lin Boqiang, director of the China Center for Energy Economic Research of Xiamen University.

China Daily