China is encouraging private investment in state-led major energy and infrastructure projects and could allow private investors to have more than 10% in certain projects, the government said in a landmark directive aimed at boosting investment and reinvigorating the economy.
The projects open to minority private shareholding will need state approval and can be in railways infrastructure, nuclear power, hydropower, inter-provincial and inter-regional transmission lines, oil and gas pipelines, LNG import and storage facilities, and water supply projects, the cabinet said.
The authorities will conduct feasibility studies to assess the revenue potential and returns on investment for the projects.
Private capital participation is encouraged and supported, China says. The project’s status will determine the specific stakes in each project, the willingness of private enterprises to participate, and relevant policy requirements.
For eligible projects, private capital shareholding may be 10% or higher, the cabinet said in the first explicit reference that it is open to raise the private capital ceiling above 10%.
“We will further strengthen policy support for attracting private capital into the energy sector,” Xu Xin, deputy head of the legal affairs department at the National Energy Administration, said at a media briefing, as carried by Reuters.
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Guan Peng, an official with the National Development and Reform Commission, told a briefing on Tuesday that “The policy puts forward clear requirements on encouraging and supporting the participation of private capital in key areas and projects.”
“It sends a signal of promoting the development of private investment,” Peng said, as carried by Bloomberg.
Earlier this year, during the peak of the trade war with the United States in the spring, China adopted its first fundamental law, specifically focused on promoting the private economy. This is “a significant step in revitalizing a sector that is key to growth and greatly boosting entrepreneurs’ confidence and expectations,” China’s Ministry of Justice said in May.
By Charles Kennedy for Oilprice.com
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