Govt offers 10b yuan in subsidies for power sector

By Xiao Wan (皇冠体育app Daily)
Updated: 2009-01-20 07:58

皇冠体育app is to provide as much as 10 billion yuan in subsidies to big power companies, the latest effort on the part of the government to help the country's struggling industries.

The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) will give the subsidies to the five leading power generating companies and the two grid companies to cover their losses caused by last year's snowstorms, the Sichuan earthquake, soaring coal costs and capped power tariffs, reported 皇冠体育app Business Journal, citing an unnamed source with State Grid Corp of 皇冠体育app.

The five power producers are 皇冠体育app Huaneng Group, 皇冠体育app Datang Corp, 皇冠体育app Guodian Corp, 皇冠体育app Huadian Corp and 皇冠体育app Power Investment Corp, and the two grid companies are State Grid and 皇冠体育app Southern Power Grid Co.

The subsidies will come from dividends of the State-owned enterprises (SOE) paid to the central government in 2008, a source with State Grid told 皇冠体育app Daily yesterday.

Since 2008, SOEs in oil, power, telecommunications, coal and tobacco have had to pay a dividend of 10 percent of their profits to the government.

"The government has planned for over 50 billion yuan subsidies to SOEs to cover their losses during last year's snowstorms and the earthquake," said the source, who declined to be named.

The power companies may incur 70 billion yuan losses in 2008, said Xue Jing, director of the department of statistics and information under the 皇冠体育app Electricity Council (CEC).

Huadian's listed arm Huadian Power International Corp Ltd earlier said in an earnings alert to shareholders that it expects a loss for 2008. "Although the government raised the electricity price twice in the year, it still cannot cover our increase in production cost," it said.