Employees of state-owned grid companies will soon be banned from further investing into power generation companies as a part of China’s new rules meant to create fair competition for the electric power generation companies.
Though China started its electricity industry reform to separate grid companies from power plants as early as 2002, the grid company staff members still hold on to stocks of power generation companies such as Shandong Luneng , Jiangsu Suyuan and Guizhou Jinyuan . The relationship provides the power generation companies favorable grounds to win big deals.
Earlier in 2003, eight government agencies, including Ministry of Finance and National Development and Reform Commission (NDRC) , issued a document to rule out the affiliated stock-holding phenomenon and demanded detailed supplementary rules soon. However, three and a half years later, the rules are still pending due to concerns that the new regulations would benefit the interests of specific parties in the industry. [Full Text]