Govt urged to loosen grip on energy sector

The private sector should be the main driving force for China's energy innovation, a leading Chinese energy expert said Wednesday, calling for the government to further loosen its grip on the energy industry, a sector that has long been a promising yet inaccessible area for private investment.

"The government has no clear idea of its due role in pushing forward the country's energy industry," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times Wednesday on the sidelines of the Summer Davos forum in Tianjin.

The government should assume its responsibility to intervene in the decision-making process of the industry at some crucial moments, such as setting caps on energy prices, to secure average people's livelihood, but too much intervention in a way that hampers private investment in the field would be unwise, Lin remarked.

Lin's outcry came at a time when private capital has shown growing eagerness to tap into the energy sector, especially after the country is set to embark on aggressive exploration of shale gas resources amid energy woes.

Claiming to possess the world's richest shale reserves, China remains in its infancy in exploring shale gas, one of the major unconventional sources of natural gas. To reduce reliance on imports of resources, the National Energy Administration unveiled in March the country's first ever five-year plan (2011-15) for developing shale gas, setting up an ambitious goal.

The government has taken note of the rising prominence of the private sector, and has already started efforts to gradually open up the energy sector to private capital. But it still falls short of expectations, given the giant State-owned firms' monopoly in the field, experts noted.

"Funding is not a problem, while whether making money or not remains a problem," Lin said, referring to potential risks facing private investment in shale gas development.

The government's natural gas pricing reform, which could guarantee investment returns for private investors has not yet been completed, and the transportation of shale gas would be a hurdle as pipelines are currently monopolized by PetroChina and Sinopec, he noted.

The Ministry of Land and Resources announced Monday the beginning of the second round of public bidding for shale gas exploration, lowering entry barriers to allow more private companies to join the bidding.

China should step up its reform in the energy industry for a more sustainable growth of the economy, Peggy Liu, chairperson of Joint US-China Collaboration on Clean Energy, a non-governmental organization focused on the energy sector, also said at a session Wednesday during the forum.

Liu believes that the nation's centralized political regime has advantages in rolling out top down reform, and urged government bodies to be more actively engaging in energy reform.