The head of the Shenzhen Energy Group is under official investigation, according to sources in the mainland power and securities sectors. Lao Derong is believed to be the second mainland power sector official to face a probe in the final weeks leading up to a top leadership reshuffle at next month's 16th Communist Party Congress and the imminent announcement of senior personnel changes in the national power industry overhaul. News of Ms Lao's apparent fall from grace comes on the heels of last month's disappearance of State Power Corp president Gao Yan. Mr Gao, formerly at the helm of China's biggest energy firm and the lame-duck power sector regulator, is widely believed to be under investigation. Both events are being seen by some as signs of score-settling by feuding factions within China's communist hierarchy as they jostle for power ahead of the party congress beginning on November 8. Beijing had been expected to finalise within days changes in the top level of the mainland's power sector leadership, a mainland industry executive said, although a public announcement was not anticipated until next month. The sector overhaul will separate State Power's power generation and distribution assets and split its generation capacity into four or five national companies. A separate regulator will take over industry oversight. Ms Lao, 59, has served as a municipal energy official and worked in Shenzhen government-backed Shenzhen Energy since February 1991, most recently as chairwoman and party secretary. Shenzhen Energy, with more than 75 per cent of Shenzhen's installed power generation capacity, is the largest of five municipal state-owned enterprises with stakes on offer to foreign investors through an open tender. The firm, with revenue of 4.7 billion yuan (about HK$4.4 billion) last year, is said to be eyeing an overseas listing after the sale of a 25 per cent stake to international investors. The mainland executive said Ms Lao had been detained since the end of last month under the so-called 'shuanggui' rules, requiring her to co-operate with internal investigations by party disciplinary officials that can sometimes evolve into criminal charges. 'Everyone in the power industry knows about it,' said a well-connected industry source in Beijing. An employee in Shenzhen Energy's general office said yesterday the company was now run by 'a leadership committee'. As in Mr Gao's case, lack of official information has inspired wild speculation. The disappearance of Mr Gao, widely regarded as an ally of hardline National People's Congress chairman Li Peng, is seen by some as revenge for the downfall of Zhu Xiaohua, former head of China Everbright Group and a protege of reform-minded Premier Zhu Rongji. Mr Zhu Xiaohua was jailed for 15 years last week for taking bribes worth 4.05 million yuan. But analysts have seen the erstwhile high-flyer as the victim of a power struggle between Mr Li and Premier Zhu. 'The speculation is that the political struggle is very heated,' said the mainland executive. Ms Lao's official resume on the web site of Shenzhen Energy gives scant clues as to where she stands in the higher-level political struggle. Before her arrival in Shenzhen, she held mostly research jobs. Analysts said they believed Ms Lao's situation would not affect the Shenzhen tender.