Cover, Issue 448, December 14, 2009
Translated by Liu Peng
Original article: [Chinese]

China is set to officially announce the establishment of a new government agency to take charge of the country's energy policy, the Economic Observer has learned.

The new agency will be known as the National Energy Commission (NEC) or 国家能源委员会 (guójiā néngyuán wěiyuánhuì) in Chinese, and is likely to be officially unveiled before the convening of the National Energy Administration's (NEA) - the country's present energy regulator - next national energy work meeting,an official revealed.

In a sign that the authority of the new body may out rank that of other ministries, a vice premier or state councilor will act as the head of the commission and high-level officials in the National Development and Reform Commission (NDRC), NEA, Ministry of Industry and Information Technology (MIIT) and State Administration of Work Safety (SAWS) are likely to make up the deputy director positions.

Zhang Guobao, head of the NEA, will likely become director of the new commission's office of general affairs, the EO learned. The NEA is currently run as an administration under the control of the NDRC.

The NEC's major obligations will be to research and draft national energy development strategy and review major issues concerning the country's energy security and development, the above official told the EO. The commission will also act as the highest office in charge of the country's energy issues.

The Energy Industry Ministry was dissolved during a round of departmental restructuring in 1993, meaning that China hasn't had a unified ministry devoted to administiring the energy sector for 16 years.

Despite the establishment of the NEA in July last year, the central government still lacks the ability to implement a unified energy policy, as responsibility for the energy sector is currently dispersed among a number of departments, including the NDRC, the Ministry of Commerce, the Ministry of Land and Resources, the State Electricity Regulatory Commission (SERC) and the State Administration of Work Safety.

At the national energy work meeting held in early February this year, Zhang Guobao repeatedly referred to the many difficulties that the NEA was having in governing the country's energy sector. Zhang complained that the NEA lacked the tools and resources to effectively administer and supervise the energy industry.

He also noted that, of the five licenses that businesses require to enter the coal mining industry, not one of them was issued by the NEA.

A source from the SERC, said despite the NEA's desire to play a bigger role in reforming the electricity, coal and oil sectors, almost all the issues related to the reform of these industries came back to price reform and market access, areas over which the NEA has little control.

It is still unclear to what extent the new commission will realistically be able to take control of governing China's energy sector.

Links and Sources
Bloomberg: China to Set Up State Energy Committee
Reuters: Top China energy office on the horizon
NEA: Official Site