China draw privatization path for power, oil, rail sectors

(Reuters) – China’s top economic planner will implement mixed ownership reforms in electricity, oil, rail and airlines sectors as part of Beijing’s overhaul of its inefficient state-owned enterprises, state media reported.

The comments were made by the National Development and Reform Commission’s (NDRC) assistant director, Liu He, at a recent state planner meeting, the China Securities Journal newspaper reported on Monday.

On September 13, China issued details of plans to further reform its bloated and underperforming state-owned enterprise (SOE) sector in what is expected to be its biggest overhaul in two decades.

A "mixed ownership" model, intended to bring in private investors as stakeholders is one main emphasis of the plan. The government has said it expected decisive results by 2020.

Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, according to the plan.

Reform guidelines have also emphasized continued party control over key sectors and the need to balance national and commercial interests.

Many of China’s major centrally owned state-owned enterprises already have part-private ownership, including the nation’s largest oil producer, China National Petroleum, and the bigger refiner, Sinopec.

Analysts have questioned whether further minority stakes by the private sector will give investors sufficient leverage to impose change in China’s powerful state enterprises.

In September, state-controlled Sinopec Corp sold 30 percent of its retail business to 25 big financial firms for $17.5 billion, while China’s two largest trainmakers were merged earlier this year into rail giant CRRC Corp

On Monday, state rail builder China Railway Group said it would inject equity interests in some of its industrial manufacturing subsidiaries into its unit, China Railway Erju, in exchange for the latter’s existing assets and businesses as part of a restructuring. (SHANGHAI, Sept 21/2015)





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