The State Electricity Regulatory Commission (SERC) yesterday opened bidding for a series of national electricity generation assets, calculated to be worth at least 17 billion yuan (US$2.1 billion).

 

"The bidding invitation will encourage participation from enterprises of any category. Multiple rounds of evaluation, price bidding and negotiation will be conducted," the SERC said in a statement. "In the process of evaluation, the long-term future development of target enterprises will be taken into consideration."

 

The statement makes it crystal clear that both local and foreign buyers are entitled to make offers, provided they meet a series of stringent criteria.

 

According to the regulator, potential investors in power generating assets should abide by the relevant laws and regulations and perform well in financial terms. They should have a clear development strategy and be swift in making decisions.

 

Bidding criteria also include having a certain level of registered capital and sound commercial credit. Experience in electricity generation investment and management would be preferred, but not essential, the SERC statement emphasized.

 

The bulk of the bidding work will be wrapped up by the end of the year, said the SERC.

 

The available assets have an aggregated power generating capacity of 9.2 million kilowatts (KW) from 38 power plants, among which seven are listed companies. The plants are spread across 21 provinces, municipalities and autonomous regions. Electricity generating capacity from the seven public firms mounts to 3.68 million KW.

 

The power stock is in the hands of the State Grid Corporation and China Southern Power Grid. In 2002, the Chinese Government commissioned them to manage and sell the assets to finance the ongoing reform of the power industry, according to the Xinhua news agency.

 

China launched a historic reform of its electricity industry in 2002. According to the reform road map, State-owned power assets will be split into electricity generation, transmission and distribution. They will be privatized and market-oriented competition will be introduced.

 

A major breakthrough in the reform came in 2002, as two power grid corporations, five power generating groups and four subsidiary consulting and engineering groups were established.

 

Experts say yesterday's official announcement of public bidding for 9.2 million KW of generating capacity was another milestone.

 

"It demonstrates that power sector reform has moved to a new level that the sale of 9.2 million (KW) capacity is going ahead," one analyst commented. China's installed generation capacity and power production have been increasing at an unprecedented annual average rate of 9.2 percent and 13.8 percent respectively since the reform began, the SERC Chairman Chai Songyue said in August.

 

(China Daily October 12, 2006)