Sat, Jan 07, 2012 - Page 5 News List

China mulling new ‘super ministry’ of energy, sources say

Reuters, BEIJING

China is considering a proposal to create an energy “super ministry” as part of a sweeping Cabinet reshuffle next year, 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 it would take on the energy-related duties currently scattered across other government bodies, the sources said, who requested anonymity because of political sensitivities.

The super ministry would also handle long-term planning and policymaking for the sector.

“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 for the sector that addresses the security of overseas oil and gas supplies, rationalizes pricing and taxation policies, boosts new energy, such as nuclear and renewables, and cuts pollution and greenhouse gases.

Without a unified energy regulator, Beijing has struggled to achieve many of its priorities, including establishing a strategic petroleum reserve and reining in its perilous and chaotic coal industry.

Among other changes, the proposal calls for giving the new ministry the power to set oil, gas, coal and electricity prices. Today, that work is handled by the powerful National Development and Reform Commission (NDRC).

It is not clear if the move would abolish the National Energy Commission, a supervising body set up at the same time as the NEA and chaired by Chinese Premier Wen Jiabao (溫家寶).

A veteran official with state-owned China National Petroleum Corp said the creation of an energy super ministry was on the cards and that it would focus on policy rather than on 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.”

Experts cautioned that creating the new ministry would mean overcoming many of the old obstacles that have long stood in the way of better regulation.

“They have been talking about it for years, but this is not something that can happen very quickly,” said Lin Boqiang (林伯強), a member of the consulting committee of the NEA and director of Xiamen University’s China center for energy economics.

The biggest stumbling block would be the NDRC, already a huge and powerful super ministry with considerable powers over the energy sector, Lin added.

“The problem is still how to transfer some of the most important roles in the sector now held by others,” Lin said.

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