China considers merging top two State nuclear firms to better compete overseas

China is considering proposals to merge its two biggest nuclear power firms as it bids to compete to build reactors overseas, three industry officials familiar with the situation told Reuters on Thursday.

Plans have already been submitted to the State-owned Assets Supervision and Administration Commission (SASAC) to merge the China National Nuclear Corporation (CNNC) with the China General Nuclear Power Corporation (CGN), said Xu Lianyi, a former government official and industry consultant.

The two companies were deliberately set up as rivals to compete for projects at home and overseas. But under government prompting, they have cooperated on a single reactor brand, Hualong I, with the intention of eventually marketing it abroad.

"The merger between CGN and CNNC is inevitable," said Xu, speaking on the sidelines of an industry conference in Beijing. He added that the proposals had received strong backing from the central government.

Xu now serves as a senior expert at the State Nuclear Power Technology Corp (SNPTC), a firm entrusted with building and developing "third-generation" nuclear technology, including the US-based Westinghouse's AP1000 reactor.

Xu confirmed that SASAC is also reviewing another merger involving SNPTC and one of the country's big five State electricity generators, China Power Investment (CPI).

Officials with SASAC and CNNC said they were not aware of the merger when contacted by Reuters.

CNNC was hived off from China's now defunct nuclear ministry and has strong ties with the military and the government.

CGN, formerly known as China Guangdong Nuclear, is the State-owned parent of CGN Power, which raised $3.2 billion in an IPO in Hong Kong this week.

Last year, CNNC and CGN made a joint bid to take a stake of up to 40 percent in a reactor project at Britain's Hinkley Point.

The first Hualong I reactor is expected to be approved for construction soon, with local media reports saying it would be built in East China's Fujian Province.

Two other nuclear company officials confirmed the merger proposals to Reuters on Thursday, with one saying that it was "ridiculous" that the firms should be competing with one another for overseas reactor projects.

They said that the two firms were looking to pool their resources and improve their ability to compete overseas.