Top Biz News

SOEs to be merged in 'green' move

By Mao Lijun and Wan Zhihong (China Daily)
Updated: 2010-01-14 07:57

An energy-saving technologies exhibition in Beijing. The merger of China Energy Conservation Investment Corp and China New Era Group Corp is regarded as a win-win deal to enhance the two companies' 'green' portfolios. [China Daily]

Two centrally administered State-owned Enterprises (SOEs) are to be merged soon to increase their input in energy conservation and environmental protection, an industry source revealed.

The government has approved the merger of China Energy Conservation Investment Corp and China New Era Group Corp, two companies under the administration of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), said a source close to the matter, without elaborating.

The move is in line with efforts to build an environmentally-friendly economy, said the source, who asked not to be named.

"I believe after the merger, the resources of the two companies could be better used to enhance the portfolio on green business," said Zhao Xiao, who is a former director of the Macro Economy Department of the Economic Research Center at SASAC.

It is also in line with SASAC's move to reduce the number of centrally administered SOEs while improving their competitiveness, he added.

Established in 1988, China Energy Conservation Investment Corp (CECIC) is the only centrally administered SOE concentrating on the energy saving and environmental protection business. Its portfolio now covers three main areas: energy conservation, environmental protection and clean energy development.

The company aims to achieve a turnover of 50 billion yuan and a profit of 5 billion yuan by 2012, according to its website. By that time its energy saving capacity will reach 4.25 million tons of coal equivalent and 400,000 tons in chemical oxygen demand reduction annually.

Established in 1980, China New Era Group Corp focuses on trade in military products.

"It is a win-win cooperation. The merger would enable CECIC to get more funds to develop its green business. It would also help China New Era, which focused on trade previously, to expand its portfolio," said an industry insider who asked not to be named.

Because many technologies used in military products are similar to those used in the wind power and solar power industries, the merger can also help both companies to improve their technologies, he added.

At present, CECIC is operating and building wind power projects with a total capacity of 1,500 mW. It is also building solar power capacity of over 1,400 mW.

"I think the development of new energy will be an important part of the new company's portfolio," said the insider.

An increasing number of SOEs are putting more effort into the development of clean energy. For instance, the country's major power producers have all accelerated their development of wind power and biomass power projects.

By the end of 2008, China's energy-saving and environmental protection industries were worth 1.55 trillion yuan, accounting for 5.17 percent of the country's GDP, according to the National Development and Reform Commission (NDRC).

He Bingguang, an official with NDRC, earlier forecast that, because of government policies, the two industries would account for 7 to 8 percent of China's GDP by 2015.