China Energy Industry

Electric giant sparks new market

China Daily
June 7, 2006

The State Power Corp of China, the nation’s major electricity supplier, is striving to reshape itself as a market-oriented conglomerate. The power company, which is better known as SP, has considered power grid operation its core business. Following international practices, SP is working towards separating grid operations from its power plants by 2005, said SP President Gao Yan. A series of in-house changes will further galvanize SP’s future business, Gao said at a recent conference. To help SP separate its grids from its power plants, SP plants and independent ones will bid to supply power for a grid. Those that charge the least would win contracts. Under this plan, independent power plants would have a fair chance to compete with SP’s subsidiaries. Gao said pilot bidding systems are going on in Shanghai Municipality and Zhejiang and Shandong provinces this month. He said they will expand to Liaoning, Jilin and Heiliongjiang provinces in April, then go nationwide by 2005. An even more competitive and orderly power generating market is expected by 2010, when the completed Three Gorges hydropower plant allows a wider grid, Gao said. Between 2006 and 2010, SP will do reform tests to break up its power distribution monopoly – an effort to encourage more different wholesalers and retailers. And by the end of 2000, Gao said, SP is expected to restructure the management of its headquarters, regional offices and provincial subsidiaries. SP will incorporate all of the country’s regional power groups, which it now controls, as business branches this year. These regional power groups now work as separate businesses or operate independently to handle local clientele. SP’s shift will essentially promote its all province-level subsidiaries and most county-level ones to remove itself from its current administrative functions.

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