Draft energy law sees light after 18 years in making

Legislation to ensure supply was resisted by vested interests, analyst says

Nearly two decades in the making, China’s draft energy law has been handed to the national legislature for review to govern security, innovation and corporate behaviour in the industry.

Stalled by vested interests, the draft was submitted on Friday by the State Council to the National People’s Congress Standing Committee for consideration at its meeting in Beijing this week, 18 years after such legislation was first mooted.

The committee will also consider separate draft amendments to the atomic energy law and proposed legislative changes covering academic degrees, tariffs, national defence education and accounting, among others areas.

The long-awaited legislation is wide-ranging, covering all aspects of the industry from planning to distribution, conservation, rural energy development and pricing.

Yang Heqing, from the committee’s Legislative Affairs Commission, said the draft energy law was designed to safeguard energy supplies, promote the shift to low-carbon power and support sustainable development.

“The main content includes improvement to the energy planning system and the energy development and utilisation system,” Yang said.

“[It is also meant to] strengthen the construction of the energy market system, improve the energy reserve system and emergency response system, and strengthen innovation in energy technology.”

In a nod to China’s offshore investment and its risks, the draft says the state “encourages innovation in foreign energy investment and cooperation methods”, but also protects “the legitimate rights and interests of Chinese citizens, legal persons and other organisations engaged in energy development and utilisation activities abroad”.

“The state shall take measures to effectively respond to political risks [overseas] such as nationalisation, expropriation, war, civil strife, government default, and foreign exchange restrictions that Chinese citizens, legal persons, and other organisations suffer from in overseas energy investment projects.”

The state also encourages and supports innovation in energy resource exploration and development technology and emission reduction technology, it says.

Closer to home, administrative agency staff would be held criminally responsible if they were found to have abused their power. Unapproved mergers and acquisitions among essential energy companies could result in fines of up to 5 million yuan (HK$5.4 million), according to the draft.

Beijing assembled a team of experts from the government and academics in January 2006 to draft the energy law, and the 18-year journey has been one of the longest for any piece of Chinese legislation.

A law professor from Tsinghua University in Beijing said the process was drawn out because it faced staunch resistance from the energy sector, which “lobbied extensively, trying to limit the scope of the law”.

“That is at least one key factor [causing the delays]. The vested interest groups from the energy sector have been trying to hold onto their territory,” said the professor, who was involved in drafting the legislation.

“I think the anti-corruption campaign in the past decade, which brought down many key officials in the energy authorities and state-owned companies, is one major element that broke the staunch resistance.

“The energy law will be a critical step to rein in powerful interest groups in the sector and to better coordinate the development of China’s carbon reduction, renewable energy … and overall sustainability strategy,” the professor said.

Awash with billions in state investment and subsidies, the energy sector has been a fertile ground for corruption and a key target of President Xi Jinping’s anti-corruption drive.

The Central Commission for Discipline Inspection, the nation’s top anti-corruption body, renewed its commitment to cracking down on the sector at its annual work planning meeting in January.

Last year, investigators detained at least 20 top officials in the energy sector, with nearly half of the top-level corruption inquiries involving state-owned enterprises, according to a tally by the Post.

One of those charged was Li Dong, former deputy general manager of China Energy Investment Group, who pleaded guilty in Jiangxi province on Friday to taking more than 100 million yuan in bribes.

A judgment will be handed down later.

Also on Friday, authorities in Chongqing sacked Che Dechen, general manager of the southwestern megacity’s gas supplier, after Chongqing Gas Group was found to have overcharged residents.

Customers had taken to social media to protest against a sudden rise in their gas bills after the supplier installed new meters.

Chongqing Gas Group has been told to fully refund the affected customers.