Nuclear firms to combine

Consolidation will boost global standing of Chinese companies

The successful restructuring of the rail sector and the relatively smooth progress in the impending merger of China's top two nuclear power firms are set to give new impetus for further restructuring of State-owned enterprises, industry experts said on Wednesday.

The main objective of the current phase of SOE reforms is, however, aimed at consolidating China's nuclear sector so that it can compete with international peers for global projects, the experts said.

Meanwhile, the long-standing proposal for a merger of China Power Investment Corp and the State Nuclear Power Technology Corp has crossed a major hurdle after it got the green light from the State Assets Supervision and Administration Commission, the Shanghai Electric Power Corp Ltd, a China Power Investment subsidiary said on Tuesday.

The company said its parent has won approval for the merger with SNPTC, but said the details of the reorganization are still on the drawing board.

In September the State Council, the country's cabinet, had ordered the merger of the country's two largest train manufacturers - China Northern Locomotive and Rolling Stock Industry Group Corp and CSR Corp Ltd - to cut competition with one another and present a unified front to bid for overseas projects.

Nuclear technologies are another priority in the national long-term strategy to achieve higher value-added exports - for example, nuclear and high-speed railway technologies with intellectual property rights.

Expert said the impending merger will kickstart work on several new nuclear reactors and also open the door for more overseas opportunities.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said the approval has come at a critical time, as the country is going to embark on a massive nuclear power plant program to optimize its energy mix.

"The merger will work to the advantage of the nuclear power industry, which is experiencing the fastest growth in the world," he said. "Several nuclear power plant projects are already underway and may are set for construction later this year."

He said that units 5 and 6 of the Hongyan River nuclear project in Liaoning province, the Shidao Bay nuclear demonstration project in Shandong province and units 5 and 6 of the Fuqing nuclear power plant in Fujian province, are likely to be the first candidates for approval.

Meanwhile, the consolidation also signals that a nuclear trio has officially formed in China - China National Nuclear Corp, China General Nuclear Power Group, as well as the combined SNPTC and China Power Investment Corp group.

Compared with CNNC and CGN, SNPTC is a new entrant in the market formed by the State Council in 2007 to handle nuclear technology development.

Though it introduced third-generation nuclear power technology known as AP1000 from the US-based Westinghouse Electric Corp, which is controlled by Japan's Toshiba Group, it does not have the license for construction and operation of nuclear power plants.

But the combination will create another big nuclear power giant to compete with the two traditional nuclear players, given that China Power Investment Corp is one of the nation's Big Five power generation groups with the qualification to operate and build nuclear plants.