Date
19 October 2017
China may open up oil exploration rights to private companies in a bid to boost investment in the sector. Photo: Bloomberg
China may open up oil exploration rights to private companies in a bid to boost investment in the sector. Photo: Bloomberg

China may push energy industry overhaul at NPC meet

China’s policy makers will gather in Beijing from March 5 for a National People’s Congress (NPC) session that will discuss the nation’s roadmap for the next five years. On the agenda are new rounds of state-owned enterprise reform and proposals to overhaul the energy and materials industries.

The country has been moving toward increased private ownership in the oil and gas industry. Authorities are expected to promote power trading as a way to make the industry more efficient.

Consolidation of state-owned enterprises in the metals industry will also continue — closing old capacity to reduce gluts. Coal-industry restructuring may require government support.

Policy makers may open up oil exploration rights to private companies in order to boost investment at a time when low oil prices are eroding cash flows at state-owned oil companies. Capital expenditure constraints might limit long-term growth unless new investors fill the void.

The NPC is likely to focus on increasing efficiency and reducing pollution from the nation’s power utilities. Ministers may propose even tighter emissions limitations from coal-fired plants, which still provide more than two-thirds of China’s electricity.

Legislators will try to sustain wind, solar and nuclear power growth from 194 gigawatts in 2015 to 418 gigawatts by 2020. Proposals to promote consumption of gas, which is increasingly abundant in China, may also be unveiled.

The views expressed in this article are those of Yi Zhu and Joseph Jacobelli, analysts at Bloomberg Intelligence.

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RC



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