Overall energy regulator planned

PUBLISHED : Monday, 10 March, 2008, 12:00am
UPDATED : Monday, 10 March, 2008, 12:00am

Array of departments to be consolidated

Beijing is to set up a full cabinet-level regulatory body, consolidating all the fuel-related responsibilities of differing agencies, to oversee the country's energy sector, according to a source close to the plan.

The State Energy Commission, as the new umbrella body will be known, will cover 10 or so ministerial or sub-ministerial agencies responsible for oil, gas, coal, power and renewable energy such as nuclear power.

Among the agencies are the Energy Bureau under the National Development and Reform Commission (NDRC), the State Electricity Regulatory Commission, China National Petroleum Corporation (CNPC) and China Petrochemical Corporation (Sinopec), according to the source, also a delegate to the Chinese People's Political Consultative Conference.

The Energy Commission's combining of all fuel-related functions is 'the brightest spot and biggest change' in the government restructuring plan, which is to be unveiled tomorrow at the annual session of the National People's Congress, said the source, who took part in researching the role of the new commission and also read the final version of the plan.

The mainland, the world's second-biggest oil consumer, has been without a centralised energy body since 1993, when the Ministry of Energy was disbanded.

The regulatory and supervising functions are also scattered among the ministries of Technology, Agriculture, Commerce, Water Resources, and Land and Resources, and other organs such as the State Administration of Work Safety and the State-owned Assets Supervision and Administration Commission.

A lack of co-ordination among these ministries and commissions has made it difficult to regulate the sector from the perspective of national energy security because these departments have different interests, analysts said.

Beijing has long recognised the need to bring its massive but fragmented energy sector under one body but a debate had raged over the form of the possible central regulator, they said.

Rumours about a new Ministry of Energy were rife in the run-up to the NPC session. But the talk stopped amid speculation that powerful central agencies and state monopolies were resisting the idea.

Two bodies, the NDRC and the National Energy Leading Group, which reports to the State Council and is headed by Premier Wen Jiabao , control the nation's energy policy.

The call for a centralised energy regulator was raised five years ago in the last cabinet revamp but was left out of the latest sweeping restructuring plans because it was hard to align the interests of the parties involved.

The plan is back in the spotlight because of worries about energy security as the mainland's dependence on imported crude oil edges towards 50 per cent and global oil prices rally to more than US$100 a barrel. Nearly 60 per cent of oil imports come from the Middle East, which makes the mainland vulnerable to any disturbance in international markets.

'Such a body is urgently needed to oversee strategic oil reserves and overcome the country's shortages of energy,' the source said.

Beijing did not set up a strategic oil reserve system until 2004, although the proposal dated back to 1993 when, after decades of self-reliance, the country became a net importer of oil.

The government estimates that by 2020 it will need to import 70 per cent of its crude oil and 50 per cent of its gas requirements.