Shanxi eyes 10b yuan fund to modernise energy sector
Provincial leadership takes the cue from Tianjin model
Shanxi province, the mainland's biggest coal production base, plans to set up an industry fund initially capitalised at as much as 10 billion yuan to support its energy projects, according to Vice-Governor Niu Renliang.
A proposal on the fund, which is expected to be open to domestic and foreign investors, had been submitted to the State Council for approval, Mr Niu told reporters yesterday.
The fund would be between six billion yuan and 10 billion yuan initially, and the government would support major energy firms in the province that would set it up, Mr Niu said.
Shanxi is following Tianjin in tapping money from the private sector to help fund local projects and enterprises.
In December last year, Beijing approved Tianjin's six billion yuan Bohai Industry Investment Fund, which will be mainly spent on manufacturing and transport companies in the city's Binhai New Area.
Mr Niu said Shanxi aimed at making the coal industry more efficient, clean, safe and modern. It also planned to better use coal resources in coking and coalbed gas projects, coal-to-oil plants, coal-fired power generators and coal-based chemical plants, he said.
Shanxi, which contributes about 25 per cent of the country's coal output, has more than 10 trillion cubic metres of coalbed with proven reserves. Its coking industry generates 15 billion cubic metres of coking gas annually, but polluted gas from the plants could be utilised.
'We're now encouraging enterprises to enhance research and development on coalbed gas and coking gas utilisation to turn them into clean energy and chemical raw materials,' Mr Niu said.
Shenhua Energy Group, the country's biggest coal firm, was in talks to build a coal-to-oil project in Shanxi, Mr Niu said.
Commerce Minister Bo Xilai also said Shenhua Group and China Petrochemical Corp were in talks with Sasol, the world's biggest coal-to-oil producer, to develop coal liquefaction projects. Mr Bo did not give any details.
The mainland, the world's biggest coal producer and consumer, is encouraging coal-to-oil projects to reduce its dependence on imported oil.
Andre de Ruyter, president of Sasol's China unit, said in June last year that the mainland had the potential to build 12 coal-to-oil plants. Shenhua is already working with Sasol on two projects in the northwestern provinces of Shaanxi and Ningxia that are expected to start operations in 2012.
The Beijing-based firm also plans to build a major plant using its own direct coal liquefaction technology in northern Inner Mongolia next year.
Meanwhile, Shenhua and its smaller rival, China Coal Energy, will invest in the one billion yuan national coal exchange in Taiyuan, the first in the country.
There would be about 31 shareholders, comprising coal mining companies in Shanxi and power firms in other provinces when the coal exchange is set up, a spokesman at the state-owned Taiyuan Coal Trading Market said yesterday.