Manufacturing News

China to integrate coal and power resources to cut overcapacity

Chinese government bodies are pushing restructuring in the field of coal and electric power so as to fend off coal-fired power overcapacity, according to a statement released on the official website of National Development and Reform Commission Monday.

NDRC and 15 other government departments stated that companies along the coal and electricity industrial chains are encouraged to improve their coordination and integrate resources by means of asset restructuring or swap, and equity cooperation.

An unidentified analyst with Haitong Securities told Securities Daily that there is a great possibility that China's largest coal miner Shenhua Group and energy producer China Guodian Corp will merge.

An unnamed analyst with Kaiyuan Securities said mergers among the country's five major power generating companies including China Guodian Corporation, China Huaneng Group and China Datang Corp are also likely to happen.

In addition, differentiated financial policies will be applied to coal-fired power projects, according to the statement. The government encourages financial institutions to grant credit to facilitate restructuring and optimizing coal-burning power enterprises, but not to fund those not up to the requirements.

Commenting on this, Peng Xin, an analyst at Tianfeng Securities said to the newspaper that digesting overcapacity is inevitably to cut some jobs, so risks like this can well be defused given the credit loans' support.

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