Calls grow for single point of governance
A Chinese government agency specialising in energy issues comes one step closer to reality this week, following discussions at the 17th National Congress of the Chinese Communist Party in Beijing.
China first established an energy ministry in 1988, combining policy-making with the ownership of energy companies, most of which were State-owned enterprises (SOEs). But the ministry existed for only five years, disappearing in the administrative reforms which scaled back government in 1993.
The call to reestablish an energy ministry has been growing in recent years, as China experiences an increasing thirst for energy. Last year it was the world’s second largest oil importer, buying in 145 million tonnes of oil, some 43 per cent of its total consumption.
’An energy ministry will definitely benefit China’s energy sector,’ said Han Xiaoping, president of China Energy Network, a major think tank in the field. But a huge amount of effort would be needed to reshuffle government agencies and energy businesses in order to make the scheme work, he added.
The need for a powerful agency to monitor the market, while ensuring China’s energy security and driving efficiency savings, was noted in a report jointly published by the World Bank and the Development Research Centre of the State Council, China’s cabinet, earlier this year.
Energy issues are mainly governed by the powerful National Development and Reform Commission, which rules nearly everything from drug pricing to investment decisions. But experts say NDRC’s role of investment decision making and its close links to SOEs are in conflict with the role of a market regulator who should treat all players equally.
Other ministries, such as the Ministry of Water Resources and the State Electricity Regulatory Commission, are also involved in energy governance. ’Foreign firms and organisations often feel frustrated when dealing with different ministries, and that’s why they are keen to create a unified energy ministry,’ said Colin Fang, Beijing analyst of the London-based consulting firm Wood Mackenzie.
But a senior official at China’s leading electricity generator Guodian Power, speaking to Chemistry World on condition of anonymity, said that China’s power sector is far from liberalised, and that energy prices are artificially lowered to reduce production costs. ’In this situation, an energy ministry acting as a market regulator will have nothing to do,’ he said.