Private investors get greenlight in power sector

China on Tuesday issued a guideline to greenlight the entry of private capital into the country's state-dominated power sector, marking the latest move to increase the economy's efficiency and bolster growth.

The 15-article guideline, issued by the State Electricity Regulatory Commission, gave specific policies regarding the sector's market access, supervision of fair power coordination, renewable energy network access and price reforms.

The move came after a number of state-run sectors, including the railway, transport and finance sectors, published similar guidelines to encourage the participation of private capital.

The central government in May 2010 published an instruction to allow the presence of private investment in monopolized sectors, but the effort has only recently gained traction, as China's growth has slowed significantly over the past 11 quarters, dragged down by weak overseas demand.

The guideline said enterprises under all types of ownership are supported to enter the power market, and the access standard for renewable energies such as wind and solar power will be improved.

Fair treatment will be given to all enterprises, it said, stating that power infrastructure companies owned by private investors will be granted operation certificates.

It said the government will urge state grid enterprises to strike grid connection contracts and power transactions with private power firms and step up supervision to ensure transparency and fairness.

The guideline also stressed supervision over the sector's pricing system, vowing to unify the price of electricity for all enterprises, both private and state-owned.

In addition, the government will work to gradually open the power survey and design, construction, consultation and the material and equipment purchasing markets, it said.

According to Lin Boqiang, head of the Energy Economic Research Center of Xiamen University, private investment currently only takes less than 3 percent in the sector's total investment.