After months of soliciting public input, the roadmap for reforming the energy investment and financing system has finally been released. According to what our reporter has learned, the “Implementation Opinions on Deepening the Reform of the Investment and Financing System in the Energy Sector” (hereinafter referred to as the “Opinions”), recently issued by the National Energy Administration, sets as its top priority fully stimulating the motivation and vitality of social capital to participate in energy investment. The document specifies that within the first half of this year, a negative list system for the management of energy investment projects, as well as systems for lists of powers and responsibilities, must be established.

Since the beginning of this year, investment in the energy sector has shown a trend of slowing growth. According to data from the National Bureau of Statistics, in the first quarter of this year, while overall fixed-asset investment nationwide grew by 9.2%, investment in the electricity and heat production sectors declined by 1.7%. Among these, private-sector investment increased by just over 11% year-on-year, a decrease of 7 percentage points compared to the full-year growth rate of last year. Meanwhile, private investment in coal mining and coal washing industries fell by 24% year-on-year, with the decline widening by 4 percentage points compared to the same period last year, bringing total investment down to 14.4 billion yuan.

“The issues surrounding investment and financing in the energy sector are, first of all, linked to the current macroeconomic environment and the overcapacity in the industry. Secondly, the energy sector is capital-intensive and has high technological barriers; private enterprises generally have weaker financial strength and face greater risks when entering this field. Moreover, under the current energy system, institutional framework, and pricing mechanisms, it’s extremely difficult for private enterprises to compete on an equal footing with state-owned enterprises and make a profit,” admitted Lin Boqiang, Director of the China Institute for Energy Policy at Xiamen University, in an interview with reporters.

To this end, the very first provision of the “Opinions” is to fully stimulate the motivation and vitality of social capital to participate in energy investment, affirm the status of energy enterprises as investment entities, and pilot a commitment system for enterprise investment projects in areas such as incremental distribution networks, wind power projects included in planning, back-pressure combined heat and power, and distributed gas-fired power generation.

The “Opinions” also propose introducing a negative list system for the management of energy investment projects and further delegating or abolishing the approval authority for energy investment projects. All projects not included in the “Catalog of Investment Projects Approved by the Government” will be subject to a filing system.

The second major list system is the list of powers for managing energy investment projects. It requires the approval authorities for energy projects to formulate a list of their respective powers for managing investment projects. The National Energy Administration should promptly develop and pilot the “List of Powers and Responsibilities of the National Energy Administration.” We must ensure that the delegation of investment approval authority aligns with the capacity of the receiving levels. In principle, projects involving major regional planning and layout as well as the development and allocation of important energy resources should not be delegated to city-level governments; under no circumstances should they be delegated to county-level or lower governments for approval.

In addition, it is necessary to establish a system of responsibility lists for the management of energy investment projects. The authorities responsible for approving energy projects must clearly define the responsibilities corresponding to their respective powers, identify the entities bearing these responsibilities, and improve the accountability mechanism. According to the division of tasks and the schedule, these three responsibility-list systems should be completed by the end of June this year.

“To fully unleash the motivation and vitality of social capital in participating in energy investment, we must first introduce some special policies and establish a level-playing field for fair competition. A list-based system would be highly beneficial,” Lin Boqiang believes. He even suggests that, in certain areas, preferential treatment should be given to private enterprises.

In Lin Boqiang’s view, what’s even more important is to carry out complementary reforms in areas such as institutional mechanisms and mixed-ownership structures—only then can private enterprises be attracted to participate. The “Opinions” propose accelerating the reform of the energy system, implementing measures for power sector reform, deepening the reform of the oil and gas sector, and advancing pilot programs in such areas as electricity market development, reforms on the retail side of power sales, and reforms in the upstream exploration and development of the oil and gas industry. They also call for the orderly liberalization of market access in oil and gas exploration, extraction, and related sectors; the improvement of the management system for oil and gas imports and exports; the refinement of entry and exit mechanisms for oil and gas processing links; and the promotion of fair and open access to oil and gas pipeline infrastructure. Furthermore, the document advocates for energy price reforms, the improvement of pricing mechanisms for oil and gas products, and the orderly liberalization of grid-connected electricity prices as well as retail electricity prices beyond those designated for public welfare purposes. It also actively encourages state-owned energy enterprises to pursue mixed-ownership reforms, drive institutional and systemic innovation, and create favorable conditions for social capital to engage in investment and financing activities in the energy sector. △ (Wang Lu)