China’s State Power Grid to sell power generating assets

12 May 2006 – China’s State Power Grid Corporation is to sell 80 billion yuan ($10bn) worth of power generating assets, according to a report in yesterday’s China Business News.

According to the newspaper, the sale is regarded as a new breakthrough in the power system reform, which has lasted for four years.

In a document released by the State Council, China’s reform process is to focus on the separation of power generating assets from the power grid as well as the acceleration in the established of regional power markets.

The State Power Grid Corporation is therefore planning to sell
9.2 GW of power generating assets with cash realized being put into a special account under supervision of the Ministry of Finance.

The State Council is also urging that another 6.47 GW of power generating assets be reserved for sale as soon as possible. The assets earmarked for sale are uses by the State Power Grid Corporation for adjusting load peak and frequency

Based on a price of 5,000 yuan/ kW for thermal power and 10,000 yuan/kW for hydropower, the two items of assets is valued at 80 billion yuan.

The State Power Grid Corporation, the biggest shareholder of these assets, has agreed to transfer this part of the assets and the preparation for assets auction is under way. Other shareholders of these assets are mostly local power investment companies, who may have a preemption in the auction.