Merger will form world’s largest power enterprise

September.01

A China Guodian Corp thermal power plant in Jiangsu Province. Guodian and China’s largest coal miner China Shenhua Energy Co will merge to form the world’s largest power firm. — Imaginechina

CHINA’S largest coal miner China Shenhua Energy Co will merge with power giant China Guodian Corp to create the world’s largest power group, the State-owned Assets Supervision and Administration Commission said yesterday.

The merger has been approved by the State Council and the merged entity will be renamed as the State Energy Investment Group Co, said Inner Mongolia PingZhuang Energy Resources Co, a listed subsidiary of Guodian, following the asset regulator’s announcement.

The merged group’s assets exceed 1.8 trillion yuan (US$272 billion) and it boasts power generation of nearly 226 gigawatts — making it the world’s largest power group.

China has promised to cut its coal production capacity to curb pollution and shift the economy toward a consumer-driven one, while also trimming bloated industrial sectors.

China aims to delay at least 150 GW of coal-fired power projects between 2016 and 2020 and cap coal power generation at 1,100 GW to help reduce carbon emission, the National Development and Reform Commission has jointly announced with 15 other authorities.

The merger will allow Shenhua’s coal supply to help Guodian better deal with price fluctuations of raw materials, while Guodian’s wind power business will complement Shenhua’s operations, Huatai Securities said.

Shenhua operates 49 coal mines and has a total generation capacity of 83 GW, while Guodian produced 58.7 million tons of coal last year and has a generation capacity of 143 GW. Guodian has the world's biggest wind power generation capacity of more than 25.8 GW.

As the world’s largest coal supplier, Shenhua Group had total assets of over a trillion yuan (US$150.7 billion) by the end of April. It ranked 276th among the global Fortune 500 in 2017.

In the first half of 2017, China Shenhua Energy Company, the listed arm of the group, reported revenue of 120.5 billion yuan, up 53.1 percent year on year.

With total assets of more than 800 billion yuan, China Guodian Corporation is one of the country’s largest power generators with installed capacity of over 143 GW. It ranked 397th among the global Fortune 500 in 2017.

SASAC has been actively restructuring SOEs this year in a bid to improve their efficiency, with the number of central SOEs falling to 98 after yesterday’s announced merger, down sharply from 196 in 2003.

Source from Shanghai Daily