State Grid joins queue to sell assets amid SOE reform push
Keira Lu Huang and Ray Chan
The world's largest utilities company, State Grid Corp of China, has become the latest state-owned enterprise to seek to sell off largely unprofitable assets, following mainland policymakers' call for diversification of ownership amid reform of the state-owned sector.
The proposed asset disposals by State Grid come shortly after Sinopec, one of the mainland's three oil majors, said it was seeking private investors to buy 30 per cent of its retail assets, which could fetch US$30 billion.
State Grid had marked three units for disposal: high-voltage direct-current transmission networks, electric-car charger facilities and pumped-storage hydroelectricity, the Economic Information Daily reported yesterday. It said they were loss-making or barely breaking even.
The mainland newspaper citied an unidentified source at State Grid as saying the company had been suffering losses from its investment in electric-car charger facilities and it had become a "headache" and a "burden" for the firm.
State Grid chairman Liu Zhenya previously said anyone with enough money could invest in such non-core facilities.
Due to the sluggish market for electric cars on the mainland, the power distributor had only completed 400 electric-car charging stations by the end of last year, a long way from the central government's goal of building 4,000 by next year.
Economist Wang Fuzhong, the former dean of the international trade department at Beihang University's school of economics and management, said he had doubts about the real intent behind the disposals.
"State Grid is the biggest monopoly company in the world. They don't truly want to develop the mixed ownership," he said. "Why do they want to have private capital in those three areas? Because they lack money there. They need to put their capital into high-return areas rather than filling those holes."
State Grid's media relations office in Beijing declined to comment.
The firm, which invested HK$10 billion for an 18 per cent stake in the US$3.1 billion offering in January launched by Li Ka-shing-backed HK Electric Investments, is preparing to raise fresh capital by issuing bonds in Hong Kong as soon as next month, according to people close to the company.