Energy Policy Shake-up

6 Mar

China has been undergoing privatisation in many areas since economic reform started in 1978 however one area that has stayed stubbornly under state control is the Chinese energy sector. However, this could finally be about to change in a big way with the Premier Li Keqiang announcing yesterday that the state would be allowing non-state capital in oil and power projects, and pledged to speed development of mixed-ownership entities.

Last November, the President, Xi Jinping promised to encourage more private participation in SOEs. In February, Sinopec, a Chinese oil and gas company, said that it would sell up to 30 percent of its marketing arm, and yesterday China National Petroleum Corp. said it wanted outside investment in its oil and gas exploration. It’s estimated that Sinopec’s plan could raise $20bn, and PetroChina, another Chinese oil and gas company, could raise $20bn by selling 30 percent of its gas pipeline.

Although Beijing will retain control of crucial lifeline industries, an advisor at Sasac said that the Chinese State Council will continue to reform towards fully mixed ownership in areas such as petroleum, petrochemicals, power and telecommunications. This issue is something that will be discussed at the ongoing National People’s Congress, but some local governments have already added their support to the announcements and stated that they will also seek more non-state investors.


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