By staff reporter Li Qiyan 

Employees of state-owned grid companies will soon be banned from further investing into power generation companies as a part of China’s new rules meant to create fair competition for the electric power generation companies.  

Though China started its electricity industry reform to separate grid companies from power plants as early as 2002, the grid company staff members still hold on to stocks of power generation companies such as Shandong Luneng, Jiangsu Suyuan and Guizhou Jinyuan. The relationship provides the power generation companies favorable grounds to win big deals.  

Earlier in 2003, eight government agencies, including Ministry of Finance and National Development and Reform Commission (NDRC), issued a document to rule out the affiliated stock-holding phenomenon and demanded detailed supplementary rules soon. However, three and a half years later, the rules are still pending due to concerns that the new regulations would benefit the interests of specific parties in the industry.  

An informative source told Caijing that the rule will be announced before the end of June since the final version has been reached after repeated revisions and discussion.   

According to the rules, staff holding key positions and positions above middle level have to sell all of their holdings in power generation companies.  

Despite the unresolved disputes among different parties, the national government has determined to announce the detail supplementary rules soon so as to start the implementation process.