Energy law details divide between state and private control of sector

Beijing has revealed more details of its much-anticipated energy law, saying private sector involvement in the industry will be encouraged but state control will be maintained in areas linked to national security.

Ye Rongsi, the deputy head of the law's drafting team, told China Petroleum magazine that state control would be maintained in areas deemed to be natural monopolies and those closely linked to national security and people's livelihood.

The law, first mooted in the 1980s, will provide a legal basis for a market-oriented energy industry and non-state sector involvement.

Despite the mainland's huge appetite for energy, many private firms have been squeezed out of the market by state-owned giants which control the majority of fuel supply.

'We have instilled a 'market basis' legal principle in the draft and to achieve this, energy assets must not be entirely state-owned,' Mr Ye said. 'By stipulating a multiple ownership system, we can provide the condition for fair competition.'

Mr Ye, also the head of the China Law Society's energy law study group, said the legislation would include rules ensuring a level playing field, including an approval system for mergers and acquisitions.

But the much-debated question of whether to set up a ministry of energy to streamline administration and enhance efficiency will not be answered until after new leaders are picked at the National People's Congress meeting in March next year.