many disagree.

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By staff reporter Tang Zheng

Xiang Dehong was brimming with ambition. The 58-year-old chairman of the Guiyang, Guizhou-based Jinyuan Power Investment Co. Ltd, told his employees at a March 24 annual conference that the company had become the biggest electricity provider in the southwestern province of Guizhou, with a total power output of 13.6 billion kWh in last year.

The figure this year is expected to reach 20 billion kWh,moncler, Xiang said.

"Jinyuan should do its best to ... boost our total installed capacity to 10 MkW by 2010...when we will build Jinyuan into a mega-conglomerate with over 15 billion yuan in annual sales revenue," he proudly declared.

Xiang’s optimism is well grounded. Founded from scratch in November 2001, Jinyuan has become the fastest growing power company in Guizhou,polo ralph lauren, accounting for one third of the province’s total power-generating capacity by April of this year. Its six subsidiary companies have also gained a firm foothold in almost every link of the electricity food chain: two subsidiaries invest in water and coal-based power stations, three run coal mines in the mineral-rich province, and another specializes in power plant construction.

Comments by Wu Yu, spokesman for the state-owned Guizhou Province Power Corporation, underscore Jinyuan’s explosive growth. "Ever since Jinyuan was founded, it has invested in all the power projects in the province," Wu told Caijing, referring to power investment projects approved by the corporation, which also plays the role of the provincial industry regulator.

On the surface it appears Jinyuan may be just another of the star enterprise that have sprung to life in the power sector since the State Council rolled out reform plans for the industry in 2002 aimed at breaking the monopoly of state-run power corporations by introducing outside capital and competition.

But there is much more behind the company’s spectacular success than that. In corporate news releases obtained by Caijing, Jinyuan refers to itself as "the largest publicly-owned, non-state-controlled enterprise in Guizhou."

However, many disagree.

"(Jinyuan) is almost owned 100 percent by individual shareholders," said one official with the State Development and Reform Commission, who declined to be named.

A report by Guizhou provincial authorities in 2003 show that the overwhelming majority of Jinyuan’s 1.2 billion shares were owned by individuals, including some 3,000 Jinyuan employees, who collectively own 14% of its shares. More than 20,000 "outside investors", according to the document,ralph lauren, own the largest portion - 84.5 percent or 1.1 billion shares.

Caijing’s investigation has revealed that these outside investors, who hold an average of 41,700 Jinyuan shares each, are employees of the Guizhou Province Power Corporation. Xiang Dehong, Jinyuan’s enterprising chairman, also happens to have a high official title: the chief manager of the state firm.

Sources close to Jinyuan told Caijing that the company also has a host of other well-placed shareholders,mercurial, including employees of local pricing and business administration authorities,abercrombie, and even officials in the provincial government.
Caijing has been unable to confirm this after three law firms it hired failed to gain access to Jinyuan’s financial documents at the local business administration bureau.

Despite lingering questions surrounding Jinyuan’s ownership, top Guizhou government officials continue to publicly laud the firm for playing a key role in Guizhou’s power development, and vow to be "supportive and protective" of it.

In response to wide-spread complaints of irregularities and preferential treatment shown toward Jinyuan, the provincial Communist Party committee sent a task force to investigate the company in late 2000,louboutin pas cher, only to wrap up the investigation several months later by recommending that Jinyuan "strengthen its [internal] Communist Party leadership".

In 2000, Guizhou inked a deal to transmit its surplus power to the heavily industrial and power-hungry southeastern province of Guangdong. In the first phase of the ambitious project, Guizhou was to send one million kw of electricity to Guangdong in 2002, with an additional one million kw each year until 2005.

Meanwhile, the provincial government encouraged the Guizhou Province Power Corporation to seek diversified funding in order to fill a 1.8-billion-yuan financing gap from construction costs. Hence Jinyuan was born.

The company soon won two highly profitable investments in the first phase of the Guangdong project, including the 1.2-million-kw Nayong Power Plant. Sources tell Caijing that the high-quality coal from local mines saved Jinyuan, the plant’s sole investor, the usual desulfurization costs and enlarging its profit margin.

As second-phase construction started after 2003, Jinyuan again proved its special status when it landed exclusive investing rights in four of the 12 power plants, and joined hands with the state-owned corporation to invest in another three.

Jinyuan’s competitors complain that the unfair advantage Jinyuan enjoys is hurting them. "We can’t say that the player and regulator are the one and the same,louboutin, but they are family. As such, many things are unavoidable," said an engineer at Wujiang (Wu River) Hydropower Development Co., another state-owned power provider in the province.

Due to a power shortage in Guizhou this year, Wujiang has been able to run its generators at full capacity during peak time of the day, but is forced to operate at only a fraction of its capacity during low-power consumption periods at mid-day and late evenings. Analysts say this will seriously affect the power plants’ sales revenues.

Records provided by the Guizhou Power Corporation show that the coal power stations run by Jinyuan, on the contrary, continue to operate at almost full capacity throughout the day.

"Now the responsibility for adjusting between peak and low power demand has pretty much fallen on us alone," said a source with Wujiang.

While it’s hard to prove that its employees’ stakes in Jinyuan has caused the provincial power regulator to give the power investor preferential treatment in purchasing electricity,abercrombie and fitch, analysts also point out that the price Jinyuan gets for the power it sells is noticeably higher than power plants under the China Power Group and the China Huadian Corporation, two of its major competitors.

After becoming aware of the detrimental effects of the relationship between local state-owned power corporations and their Jinyuan-style spin-offs across China, central government regulators in August 2003 temporarily banned employees of the state power system from holding shares in electricity companies.

But so far, that hasn’t stopped Jinyuan’s explosive growth. Caijing has learned that Jinyuan’s proposals for further development at Nayong Power Plant, assisted by the provincial power corporation, has obtained approval from the State Development and Reform Commission.

Meanwhile, Xiang, Jinyuan’s chairman and chief manager of the Guizhou Province Power Corporation, has yet to reply to Caijing’s repeated requests for interviews.
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