Giant SOEs Merger

Two Chinese state-owned enterprises (SOEs) have merged into an energy conglomerate with total assets worth 1.8 trillion yuan ($272.96 billion).

The new company, China Energy Corp., has become the world’s largest in coal mining, thermal power, renewable energy and coal-to-liquid conversion, according to the founding ceremony held on November 28.

It was formed by the reorganization of power generator China Guodian Corp. and coal miner Shenhua Group.

“It is the biggest consolidation among central SOEs in recent years,” said Xiao Yaqing, Minister of the State-Owned Assets Supervision and Administration Commission of the State Council.

Xiao expects the deal to improve corporate profitability and help coordinate the coal and electricity markets.

The merger is in line with the country’s effort to push restructuring in state-owned companies. During the past five years, 34 central SOEs were reorganized to improve competitiveness, according to Xiao.

The total number of central SOEs has halved from 196 in 2003.

Qiao Baoping, Chairman of China Energy Corp., said the company would focus on coal mining and power generation, while making a greater effort to eliminate excess capacity, and speeding up its drive to go global.

In early November, China Energy signed a memorandum of understanding with the government of West Virginia to cooperate on shale gas exploration. The deal, with total investment to reach $83.7 billion over 20 years, will be the largest energy cooperation deal to date between China and the United States.