H share Shandong International Power Development (SIPD), the province's largest power producer and the listed flagship of one of China's five electricity giants, has conceded government tariff reform will pose challenges to the company but said the impact will be limited in the next one to two years.
Chen Feihu, vice-president of SIPD's parent China Huadian Group, said the State Development and Reform Commission had issued a number of documents on tariff reform this year.
But he said the government intended to carry out the reform process gradually and price stability was emphasised at the initial stage.
'The introduction of competition will inevitably bring pressure upon us, but it takes time to roll out a competition framework and various proposals are being studied,' he said. 'The impact is limited in the next one to two years.'
On Tuesday, the China Economic Times reported that Beijing last month approved a tariff reform proposal framework, under which the power producers would see their selling prices gradually changed from a state-stipulated regime to semi-competitive and then fully competitive ones.
During the transition, the prices would be split into a fixed component to allow generators to recover fixed costs, and a variable component allowing competitive bidding.