China Petroleum & Chemical Corporation, or Sinopec Ltd, is a Beijing-based oil and gas company which is listed in Hong Kong, Shanghai and New York (NYSE: SNP). It is one of the world’s biggest companies by revenue. Sinopec Ltd’s parent, Sinopec Group is one of China’s biggest petroleum groups.
CCTV exposé shows frustration of agencies at keeping firms in check
CCTV broadcast shows deep frustration of environmental agencies to prevent state-owned giants from flouting safety and pollution rules
The televised dressing down of state oil giant Sinopec for repeated regulatory violations has helped throw back the curtain on the lopsided battle between the mainland's powerful state-run enterprises and its weak environmental watchdogs.
For years, analysts and environmental advocates have complained state-owned companies have been allowed to flout environmental regulations as regulatory officials are either unable or unwilling to interfere.
Analysts say the decision to air footage on CCTV of Sinopec being berated by officials from the Ministry of Environmental Protection and Guangdong's provincial environmental watchdog, exposes regulators' deep frustration with the situation.
The officials criticised the petroleum giant's subsidiaries for improperly storing and illegally dumping waste water. In the wake of the state-media exposé, Sinopec has suspended production at three plants, including two refineries in Guangdong, while environmental reviews are performed.
The environmental practices of state-owned firms would be difficult to reform as their economic might and political power often gave them sway over regulatory officials, a source close to the ministry said.
"Local governments have been zealously courting big industrial projects by state-owned enterprises as they bring in tax revenues and create jobs," said the source, who declined to be named. "On the other hand, the senior executives at these companies usually have higher official rankings than local cadres, making grassroots environmental watchdogs reluctant to bark."
Often, the state giants push local governments to approve potentially polluting projects in the name of national interests, such as providing a crucial source of energy or economic growth.
Similar sentiments were echoed by Zhou Quan , director of Guangdong's provincial environmental bureau, during the meeting with Sinopec's subsidiaries.
"[The companies] are still bullying local governments all the time, claiming [their operation] is important for national economy and people's livelihood," Zhou said.
Ma Jun , director of the Institute of Public and Environmental Affairs, said the fines handed out for illegal dumping of sewage stood at 100,000 yuan (HK$122,000) to 200,000 yuan - meaning companies found it more economical to break the law than abide by it.
A proposal to amend the law and fine polluters on a daily basis has yet not been accepted by Beijing.