July 14, 2011
Economic Observer Online
Translated by Zhang Wen
Original article [Chinese]

China’s central government is about to push ahead with a plan that will see many of the auxiliary companies of the country’s largest power companies split off from their parent group to form two separate new conglomerates. 

The EO has learned that the first of these new companies, the China Electric Power Construction Group (中国电力建设集团), will be formally established on Aug 28. This new group will be being formed from a merger of the secondary business divisions of 14 provincial branches of State Grid Southern Grid that will be placed under the control of the merged Sinohydro Corporation and China Hydropower Engineering Consulting Group Co. (CHECC).

China initiated the reform at the beginning of this year when the State Council appointed the State-owned Assets Supervision and Administration Commission (SASAC) to take charge of the process.

The move is the most substantial change to the country's power system since major reforms carried out in 2002, which included the separation of responsibility for power production and transmission.

The group aims to become a comprehensive electric power construction group that focuses on project contracting, engineering management, designing, construction and repairing.

The new group’s head offices will be located on Beijing’s West 4^th ring road.

When construction of the new office is completed, all the administrative deparments of the new company will be relocated to the new site, according to people close to the matter.

The intention of the restructuring is part of SASAC's broader plan of reducing the amount of companies under its control and strengthening the competiveness of large state-owned corporations.

The Economic Observer has learned that a second company, the China Energy Construction Group, that will also be formed via a merger of the secondary businesses of large power companies, could be established as soon as August too.

Links and Sources
Economic Observer: Central Government Prepares Launch of Leadership Group to Oversee Power Industry
Economic Observer: New Electric Power Construction Giants to be Established as Early as May