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Energy regulator NEA's new chief Wu Xinxiong seen as neutral

Wu Xinxiong, who has a brief industry record, is viewed as an interim pick as he nears retirement

PUBLISHED : Wednesday, 20 March, 2013, 12:00am
UPDATED : Wednesday, 20 March, 2013, 5:12am
 

Wu Xinxiong, the new director of the expanded National Energy Administration (NEA), only has a short track record in energy regulation.

Wu, who turned 63 in October, has been head of the ineffectual State Electricity Regulatory Commission (SERC) since June 2011, and is seen by some analysts as an interim leader for the NEA becauses he will soon reach the retirement age of 65.

Beijing announced on March 10 that the decade-old SERC, tasked mainly with establishing and monitoring electricity markets as Beijing gradually makes state-stipulated electricity prices more market-oriented, would be merged into the NEA.

The NEA, however, will remain under the oversight of the National Development and Reform Commission (NDRC), the mainland's top industry regulator.

A few years after the SERC was set up, it fought with the NDRC for control over electricity pricing, with the NDRC winning.

Since power market reform stalled after a few years of experimentation with limited regional power trading, the SERC became largely a research organ with little actual power.

The NDRC's price department holds energy-pricing power, while the NEA is responsible for approving new energy projects. Their policies are the biggest determinant of energy companies' expansion and profitability.

Wu is seen as holding a more neutral position than fellow regulators with backgrounds in different sectors of the energy industry, and analysts said that could help balance the interests of those energy sectors.

For example, the power industry favours the development of large coal-fired electricity plants, while oil and gas producers are keen for natural gas development to be made a priority.

The NDRC has been promoting natural gas as a cleaner-burning fuel for power plants, and gas is also increasingly replacing petrol and diesel as fuel for the transport sector.

"There is nothing in Wu from what I can see that shows that he has any close connection with the power industry that would induce him to oppose the gas industry's development," said Beijing-based independent energy industry consultant Robert Blohm.

There is nothing in Wu from what I can see that shows that he has any close connection with the power industry that would induce him to oppose the gas industry's development

"He is kind of neutral," Blohm added.

Wu was chosen to lead the expanded NEA, bypassing deputy NEA directors who are younger and have more work and regulatory experience in the oil and gas, electricity, coal and renewable energy sectors.

When Wu was appointed head of the ministerial-level SERC he had almost 28 years of experience as a local and provincial government leader.

A native of Jiangyin , Jiangsu province, Wu had stints in a clothing factory and a fertiliser plant, and taught in a secondary school in his early working years.

He became deputy mayor of Jiangyin in 1983, mayor of the city in 1989, and mayor of the larger city of Wuxi in 1998.

In 2001, he was appointed as party secretary of Nanchang , the provincial capital of Jiangxi , and was appointed as Jiangxi's governor in 2007.

It remains unclear whether the NEA will be upgraded to a full ministerial portfolio from its vice-ministerial level.

A proposal for the establishment of a ministry of energy, first mooted in 2008, never came to fruition.

Lin Boqiang , from Xiamen University's Centre for China Energy Economics Research, said he anticipated little change in Beijing's energy price policies after the merging of the NEA and SERC.

"Unless the NDRC relinquishes its pricing power, it is hard to push through energy price reform no matter how the NEA is restructured," he said.

Beijing has been reticent about letting the market decide energy prices because it worries that volatile prices would stoke inflation and consequently cause social unrest.

While the abolition of the SERC appeared to have dealt a blow to reforming the power market, Blohm said the NEA's 12th five-year plan for the energy sector, released in November, showed that wider energy price reform was still on the agenda.

"The fact we have had reform-minded former leaders like Ma Kai and Xu Dingming in the government also helped keep it on the agenda," he said.

Former NDRC head Ma Kai was appointed as a vice-premier on Saturday after being secretary general of the State Council since 2008, while former National Energy Bureau head Xu Dingming is an adviser to the State Council on energy matters.

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