Wed, November 04, 2009
A leading nuclear power producer recently teamed up with private equipment producers, marking a shift for an industry that used to rely almost exclusively on State-owned enterprises.
China Guangdong Nuclear Power Holding Co (CGNPC) made an agreement Monday valued at 1 billion yuan ($146.46 million) with 30 private firms. This is CGNPC's first parts contract with non- State-owned companies.
The 30 private companies were selected from 150 equipment producers covering solar batteries, power converters, distributor fittings, and pipelines for transferring oil and gas.
Hangzhou Boiler Group, a private firm that was granted a 300-million-yuan ($43.94 million) contract, said the company will provide equipment for six projects over five years.
"CGNPC itself does not have the capacity to manufacture all the equipment it uses. These contracts will also help promote the development of private companies in the industry," said Huang Yicai, a project manager with CGNPC in Zhejiang Province.
CGNPC will also sign more agreements with private firms worth 4 billon yuan ($585.83 million) in the future, he added.
Currently, the nuclear power firm is working on 16 equipment production projects, with costs of more than 100 billion yuan ($14.65 billion).
CGNPC said in an email Tuesday that it selects producers based on their ability to meet high quality standards, regardless of whether they are private or State-owned.
Experts, however, remarked that the private firms still have a long way to go.
Private enterprises are still only a tiny part of the market, said CGNPC's Huang.
"State-owned companies such as Dongfang Electric Corporation and Shanghai Electric have an overwhelming advantage compared with private ones," Zhang Huazhu, chairman of the China Nuclear Energy Association, said Tuesday.
In the first half of the year, the listed Dongfang Electric Corporation logged new nuclear power orders valued at 10.2 billion yuan ($1.49 billion), making up almost a third of the total 35.1 billion yuan ($5.14 billion) worth of orders that have not yet been filled. Currently, the company occupies 50 percent of China's nuclear power market.
"Right now, private producers are limited to only making equipment, and they are not expected to play a major part in the industry's development," Zhang said.
A report from TX Investment Consulting released October 20 predicted the amount invested in nuclear power equipment would reach 340 billion yuan ($35.15 billion) by 2020 as China expects to see its nuclear power capacity expand to 86 gigawatts by the end of the next decade.
