Investment Updates News
- Govt. OKs foreign investment in grid
Date: 17-Dec-2007 Sources: (Shenzhen Daily)
THE government is allowing foreigners to invest in the country's power grid sector for the first time, the country's economic planning agency said Friday, ending a monopoly by State-owned companies.
The policy, effective Dec. 1, allows foreigners to invest in the construction and management of power distribution systems, the National Development and Reform Commission said in a statement on its Web site.
It suggests the government is wooing foreign investment to modernize its aging network of grids to reduce the risk of blackouts.
Experts describe China's power grid as extremely inefficient. The country needs to invest US$1.51 trillion in its power grids in the period through 2030, the International Energy Agency said in its latest World Energy Outlook.
China added more than 100 gigawatts of power generating capacity last year - equivalent to France's entire installed capacity - and many areas now have the potential to produce more electricity than is needed locally.
Much of this surplus capacity is unused. Poor regional interconnections prevent power from being transmitted to many provinces and cities, particularly in eastern and southern coastal areas, which continue to suffer periodic shortages at times of peak demand.
China's power grids have been monopolized by two State-owned companies, State Grid Corp. and Southern Power Grid Corp., which have invested billions of dollars in grid construction and face difficulties in financing new investments.
The new policy forbids foreign investors from owning majority stakes in power grid joint ventures, in line with the government's policy of maintaining State control of the sector.
The government currently has tight control over power distribution and retail electricity prices.
Power generation was opened to foreign investment in the 1990s.
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