Security fears curb Chinese takeover of power firm

Shapps puts restrictions on deal to buy XRE Alpha in sign of growing concern about energy assets

GRANT SHAPPS, the Business Secretary, has imposed restrictions on the takeover of a tiny shell company linked to UK power generation amid fears it could hand intelligence to China.

In a sign of growing British concern about energy assets, the Government set conditions for the purchase of XRE Alpha Ltd, a UK-based company set up last year, by a Chinese state-owned company.

XRE Alpha was established by Xing Jin, a 48-year-old businessman who is also a director and shareholder at London-based XRenewable, a company that develops power industry software.

Filings at Companies House show XRE Alpha as dormant with assets of £1.

The Government has begun to take a much tougher stance on China’s acquisition of tech businesses and power assets after years of allowing takeovers to go ahead with no intervention.

Last month the UK bought back a stake in the planned Sizewell C nuclear project from Chinese state-owned power business China General Nuclear (CGN) in a deal thought to be worth £100m, amid concern about its involvement in critical national infrastructure.

CGN remains an investor in the Hinkley Point C nuclear power station in Somerset but its plans for a third power plant in Bradwell, Essex, now have little prospect of coming to light.

Rishi Sunak has said the “golden era” of Anglo-Chinese relations is over, describing previous plans for close economic ties as “naive”.

The directive published by the Department for Business, Energy and Industrial Strategy has been made under powers that came into force in January, allowing the Government greater scrutiny over foreign investments.

The order says China Power International Holding’s 90pc takeover of XRE Project Alpha, the Hong-Kong based parent of XRE Alpha, poses a national security risk relating to the electricity system.

The directive restricts the information that can be shared with XRE Alpha’s new Chinese owner, and restricts the management of certain services to government-approved operators.

The precautionary move is thought to be the first of its kind levelled against a company with no assets.

Only 12 so-called final orders have been made since the new National Security and Investment Act has been in place.

Most have been for recognisable firms such as chip maker Newport Wafer Fab, or Truphone, a telecoms firm which was backed by Roman Abramovich.

Earlier this month the Government also intervened when China took over development rights in a major battery storage project in Wiltshire.

China Power International Holding is controlled by the Chinese government and builds and owns power stations. It was approached for comment.

National Grid said it had no contact with either company. Elexon, which helps manage British electricity trades, said XRenewable had taken steps towards registering as a non-physical trader, but had withdrawn in February.

The Business Department declined to say what was behind the move beyond security concerns. But shell companies have been used before to purchase assets like other companies.

Mr Jin, a director at XRenewable and XRE Alpha, was approached for comment.