Beijing mulls further power reform
The break-up of State Grid could be on the cards as mainland regulators seek to boost efficiency and open up competition
Beijing is consulting the electricity industry on how to carry out further reform of the mainland's monopolised power distribution sector with some form of a break-up in its operations to enhance efficiency and introduce competition as a core part of the restructuring.
Analysts said the process will be complicated and long, as previous attempts to break up industry giant State Grid Corp, which has a monopoly in most of the country, met strong resistance from its top officials.
"This time around, the probability of some reform going ahead is quite high," said Zhu Songbin, an energy sector expert and managing director of Beijing-based consultancy Songlin Group. "With Beijing's anti-corruption campaign and state-owned enterprises reform gathering steam in the past half year, the time is ripe for the break-up to happen. State Grid is considered too big and too much of a barrier for reform and improving efficiency of the industry."
The National Audit Office has in the past few months been carrying out extensive checks on the giant's accounts, after it received letters alleging financial irregularities and potential corruption.
Zhu Changlin, head of the State Grid's regional subsidiary North China Grid, was taken away in May to assist investigations, the respected Caixin business magazine reported in May.
Industry regulator National Development and Reform Commission (NDRC) has begun an industry consultation exercise since July on reform, China Business Journal reported in late July.