China looks to create energy ‘super-ministry’
Beijing seeks to impose its will on unsettled industry
They have been talking about it for years but this isn’t something that can happen very quickly
LIN BOQIANG
BEIJING
China is considering a proposal to create an energy “superministry” as part of a sweeping cabinet reshuffle in 2013, two independent sources said, a step that would help Beijing impose its will on an industry beset by bureaucratic infighting.
The new ministry would replace the National Energy Administration (NEA), China’s main energy regulator, and take on the energy-related duties now scattered across other government bodies, said the sources, who did not wish to be named because of political sensitivities.
“Various interest groups are now wrestling (over the plan), but there is a need for an energy super-ministry,” a source with ties to China’s top leadership said.
China, the world’s biggest energy consumer, has been trying to draw up a long-term strategy on the security of overseas oil-and-gas supplies, rationalize pricing and taxation policies, boost nuclear and renewables and cut greenhouse gas emissions.
Without a unified energy regulator, Beijing has struggled to achieve many of its priorities, including establishing a strategic petroleum reserve and reining in its chaotic coal industry.
Among other changes, the proposal — being considered by the State Council, China’s cabinet — calls for giving the new ministry the power to set oil, gas, coal and electricity prices, work now handled by the National Development and Reform Commission (NDRC), China’s state planner.
A government official directly involved in Chinese energy policy said the sprawling NDRC will probably be the biggest stumbling block in the restructuring plan.
“The NDRC should be dismantled and its authorities dispersed to different government ministries,” the official said.
It is not clear if the reshuffle would abolish the National Energy Commission, a supervising body set up shortly after the NEA and chaired by Premier Wen Jiabao.
The NDRC and the NEA declined immediate comment.
A veteran official with the state- owned China National Petroleum Corp. said the creation of an energy super-ministry was in the cards and would focus on policy rather than detailed regulation.
“It will not be a specialized ministry like the (now-defunct) Ministry of Coal Industry that micromanaged specific sectors,” the official said, asking not to be identified. “It will be a policy setter and provider of services.”
Analysts said an integrated ministry would help remove jurisdictional problems.
“For coal, this new ministry can come in and make hard decisions on energy and resource conservation, like production caps and encouraging imports,” said Ma Chunsheng, analyst at the China Coal Transport and Distribution Association, adding that such duties are currently being performed by the NDRC.
Experts cautioned that creating the new ministry would mean overcoming many of the obstacles that have long stood in the way of better regulation.
“They have been talking about it for years but this isn’t something that can happen very quickly,” said Lin Boqiang, a member of the consulting committee of the NEA and director of the China Centre for Energy Economics at Xiamen University in southeast China.
The challenge will not merely be the NDRC, already a huge ministry with considerable powers over the energy sector, but also others with a say in policy, like the water resources, transportation or agriculture ministries, Lin added.
China formed its first energy ministry in 1988 from the remnants of the old electricity, coal and oil bureaus, but dissolved it in 1993 after the regulator failed to control the powerful state-owned enterprises that dominate the sector.
Policy overlaps and conflicts of interest are common.
For example, in the face of a standoff over prices between the power and coal sectors, Beijing found itself powerless to prevent the blackout that struck south China in early 2008, triggered by freezing blizzards.
The absence of a single voice for the energy sector has also stymied China’s efforts to improve energy security.