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Monopoly Grid Switches to Private Firm

The State Grid Corp, the former monopoly in China's power sector, has transferred its multi-billion US dollar generating assets to the Huaneng Group -- one of the nation's five largest power conglomerates.

The move is a step forward to push through anti-monopoly reforms since last December in the industry.

The reforms require the State Grid Corp -- which controlled half of the nation's power plants and almost all of the transmission and distribution lines -- to inject all of its generating assets into the five competing State-owned generating groups.

Huaneng is the first one of the so-called Big Five -- which includes China Huadian Group, China Guodian Group, China Power Investment Group and Datang Group -- to complete such an asset transfer.

Under yesterday's agreement, Huaneng received the State Grid's stakes in 13 generating subsidiaries for free. It involves a net production capacity of 4,640 megawatts.

The assets account for 18 per cent of Huaneng's existing capacity of 25,660 megawatts.

The assets include the State Grid's 27 per cent shares in Yunnan Huaneng Lancangjiang Hydropower Company Ltd, which is building the Xiaowan Hydropower Station, China's second largest hydropower plant after the Three Gorges project.

After the transfer, Huaneng has become the majority shareholder of the 12 power plants, except the one in Zhejiang Province.

"Most of the assets are of good quality,'' said Li Xiaopeng, chairman of Huaneng Group, yesterday at the signing ceremony. "They are new plants with advanced technology and are the main power suppliers in key areas.''

Li said the move is conducive to building up Huaneng as the world's leading electricity producer.

Huaneng has said it aims to double its generating capacity by 2010 to 60,000 megawatts, to crack the Fortune 500 list.

Calling yesterday's asset transfer "historic,'' Zhao Xizheng, general manager of the State Grid Corp, urged the speeding up of the separation of power generation and grid assets.

About 500 plants with a total capacity of 163,000 megawatts will be transferred to the Big Five.

Earlier this month, the State Grid transferred the Jianbi Power Plant in Jiangsu Province to China Guodian Group, marking the first handover of the power plant assets.

Zhao also said the company is expected to set up five regional grid companies this year to manage regional power markets.

The markets, as part of the industry reforms, will facilitate electricity exchanges among provinces in the same region.

(China Daily September 24, 2003)

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