The State-owned Assets Supervision and Administration Commission will launch the second phase of its plan to inject funds into state-owned enterprises, reported China Business today. State-owned power enterprises will be among the beneficiaries.

According to a member of staff of the State Grid Corporation, five power groups and two grid companies will benefit from the Commission's 10 billion yuan investment ($1.5 billion). The main purpose of the investment is to compensate the companies for losses related to government policies, and for other losses caused by the snow storm and the earthquake of 2008.

"The Commission will move funds into these enterprises' account in the near future," said the contact. Secondary power companies are not included in the support process.

Although staff of the information department of the State-owned Assets Supervision and Administration Commission did not deny that the Commission will invest in state-owned power enterprises, they declined to give any further information as to the level of investment and the details of the plan and referred enquiries back to the Commission's press releases.

The network of state-owned power companies comprises China Huaneng Group, China Datang Corporation, China Guodian Corporation, China Huadian Group and China Power Investment Corporation. The two grid companies are State Grid and China Southern Grid, and there are other four secondary power groups providing indirect support activities who are not involved in generation and distribution.

Analysts have already suggested that the increase in coal prices and the two disasters in 2008 have placed enormous pressure on power enterprises' operations, and it has been argued that the investment is an inadequate response to the situation.

All the state-owned power enterprises recorded deficits in the first half of 2008, according to Li Rongrong, the director of the State-owned Assets Supervision and Administration Commission.

It is expected that the investment support from the State-owned Assets Supervision and Administration Commission will help to lower the power companies' asset-liability ratios and relieve short-term financial pressure.

(China.org.cn January 19, 2009)