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China’s State Grid Won’t Be Split Up
Summary:Reports that China’s State Grid would be split into five parts were false.


Beijing News Online

By Zhong Jingjing (钟晶晶)
Mar 21, 2013
Translated by Zhang Xiaoxi
Original article: [Chinese]

Wang Jingjun (王敬军), head of the news department at State Grid Corporation of China (SGCC), said on Wednesday that SGCC will not be split into five parts.

This news comes after Century Weekly published an article on Mar 18th saying, “In the new round of market-oriented reforms of the electricity system, the SGCC is expected to be split into five parts. This reform is set to start after the ‘Two Sessions’.”

Insiders said yesterday that the issue of splitting up SGCC had been discussed about a decade ago. At that time, the power grid company planned to reorganize itself into several regional branches or subsidiaries which would each be responsible for local transmission and distribution. The SGCC would run regional power dispatch.

Instead, the SGCC decided to set up five regional grid segments. Each is an independent legal entity and owns regional power assets.

During the “Two Sessions,” Vice President of State Electricity Regulatory Commission (SERC) Shao Bingren (邵秉仁) proposed splitting the state grid into several equal regional power grids to simplify the electricity transmission and distribution costs.

The rumors about SGCC splitting up led to a stock slump that lasted two continuous trading days for many listed companies owned by SGCC. On Mar 18, XJ Electric Co. Ltd. and NARI Technology Development Limited Company had their market values pushed down to 1.1 billion ($177.1 million) and 2.6 billion ($418.6) respectively.

By Mar 20th, the companies had started to rebound, with XJ Electric Co. Ltd. up 2.35 percent and NARI up 2.83 percent.

Several brokerage reports had pointed out that the news of a break up was not credible. A report by Ping An Securities said that the reform’s focus was instead promoting separation of electricity transmission and distribution.


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