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Xiamen moves to break monopoly in public sector
(China Daily)
Updated: 2004-08-11 11:46

XIAMEN: Senior local officials have confirmed that China's eastern city Xiamen is in talks with overseas energy companies to form a joint venture to distribute natural gas for the city.

The move aims to break up a long-time State monopoly over the public sector and provide better service to citizens.

The city's Vice-Mayor Wang Ling said that there were negotiations going on with "almost all the overseas companies that have had a presence in the mainland's natural gas distribution market" in establishing such a venture.

The venture will be licensed to distribute natural gas in the city, she said. But she did not specify the companies.

Currently, overseas players such as Wah Sang Gas Holdings and Hong Kong China Gas are working hard to cash in on the mainland market.

However, Wang said, overseas parties would only be allowed to control up to a 49 per cent stake in the joint venture.

"This is to make sure that the interests of our citizens are not affected," she said, adding that social welfare was a priority in the joint venture proceeding.

Wang said co-operating with overseas players aims to enhance efficiency and management of the State-owned distributor.

"Xiamen is not poor in funds," she said, hinting the government was fully able to shoulder the burden of the cost of supplying natural gas to its 1.31 million citizens.

"The joint venture plan indeed aims to better serve citizens by absorbing advanced management and technologies from overseas companies," she said.

She also said the municipal government would not consider talking with private investors about the endeavour, although private funds have previously been active in the energy distribution market.

It is reported that China's New Hope Group, a leading private enterprise, has signed contracts to be the exclusive supplier of natural gas to 10 cities for 30 years. The cities are in the provinces of Hubei, Anhui, Sichuan, Jiangsu and Gansu. Another private firm Xinao Gas Holdings has also gained the distribution rights for a batch of cities.

Foreign and private investors were allowed access to public utilities such as water, gas and electricity in late 2002.

Apart from the natural gas market, the city also welcomes overseas companies in reshuffling its State-owned water facilities, hospitals and schools, Wang said.

She said that the city is talking with an overseas hospital about taking stakes from a local public hospital.

But Wang said the city will not consider allowing private funds into public hospitals in the short term, although private investors will soon be allowed to take stakes of public hospitals soon.

The city will also roll out the red carpet for overseas investors to establish more international schools, Wang said.

"Public schools may learn from them to enhance management and professionalism," she said.

Currently, public schools still lag behind their international counterparts in terms of curriculum-setting and creativity.

And the city's water management sector has been opened up for non-State capital, Wang said.

State-owned company Xiamen Water (Group) Co, which manages the city's water facilities and management, is seeking to sell part of its State-assets to a non-State company. It is now negotiating the acquisition, Wang said, without naming the other party.

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