China - Strategic options for power sector reform : summary, speeches, and documents from a Workshop, Beijing July 8 - 10, 1993

People's Republic of China Ministry of Finance Ministry of Electric Power fkw I9?3 Summary, Speeches, and Documents from a Workshop S hrtei Oplims fo P'oW Stor Refam in China Beijing July 8-10, 1"3 GovmametofCtchm&,kszofHIwKc awtMi*ity fflecPowa ESMAP M- - Eny Sector Managementv Astne Pmm- Enrgy Sector M-ianagement Assistance Pngramme  JOINT UNDP / WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) was launched in 1983 to complement the Energy Assessment Programme, established three years earlier. ESMAP's original purpose was to implement key recommendations of the Energy Assessment reports and ensure that proposed investnents in the energy sector represented the most efficient use of scarce domestic and external resources. In 19C,Can international Comrnrission addressed ESMAP's role for the 1990s and, noting the vital role of adequate and affordable energy in economic growth, concluded that the Programme should intensify its efforts to assist developing countries to manage their energy sectors more effectively. The Commnission also recommended that ESMAP concentrate on making long-termn efforts in a smaller number of countries. Today, ESMAP is conducting Energy Assessments, performing preinvestment and prefeasibility work, and providing institutional and policy advice in selected developing countries. Through these efforts, ESMAP aims to assist goverrunents, donors, and potential investors in identifying, funding, and implementing economi- cally and environmentally sound energy strategies. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (ESMAP CG), composed of representatives of the UNDP and World Bank, the governments and institutions providing financial support, and repre- sentatives of the recipients of ESMAP's assistance. The ESMAP CG is chaired by the World Bank's Vice President, Finance and Private Sector Development, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work program, and other issues. ESMAP is staffed by a cadre of engineers, energy planners and economists from the Industry and Energy Department of the World Bank. The Director of this Department is also the Manager of ESMAP, responsible for administering the Programme. FUNDING ESMAP is a cooperative effort supported by the World Bank, UNDP and other United Nations agencies, the European Community, Organization of American States (OAS), Latin American Energy Organization (OLADE), and countries including Australia, Belgium, Canada, Denmark, Germany, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States FURTHER INFORMATION An up-to-date listing of completed ESMAP projects is appended to this report. For further information or copies of ESMAP reports, contact: ESMAP c/o Industry and Energy Department The World Bank 1818 H Street N.W. Washington, D.C. 20433 U.S.A.  Strategic Options for Power Sector Reform in China Summary, Speeches, and Documents from a Workshop, Beijing, July 8-10, 1993 Convened by the Ministry of Finance and the Ministry of Electric Power People's Republic of China Report No. 156193 Cosponsored and jointly organized with The World Bank China and Mongolia Department and the Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) This paper is one of a series issued by the Industry and Energy Department and the Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP). The paper may not be published or quoted as representing the views of the UNDP, World Bank Group, ESMAP, or any of their affiliated countries and organizations, and none of the foregoing are responsible for the accuracy or compleeness of the matrial presented.  Contents Preface ................................................ vii Steps in the Process ............................................... vii Achievements of the Process.. ................................. . ........ viii Puture Direction of Reforms ............................................... ix Acknowledgments .................................................x Workshop Schedule ................................................ xi Day 1: Thursday, July8 ............................................... xi Day ': Friday, July 9 ................................................ ........ xi Day 3: Saturday, July 10 ............................................... xiii Workshop Participants ................................................ xv 1. Introduction .................................................1 2. International Experience of Power Sector Reform .............................................. 3 Modes of Ownership and Management .......................3........................ 3 Vertical Integration of Activities ................................................ 5 Concentration or Fragmentation and Level of Coordination .................. ............ 6 Competition and Monopoly ............................................... 7 Conclusions from International Experience ............................................... 10 3. Power Sector Overview ................................................. 13 Organization and Recent Trends ............................................... 13 Future Demand Growth ............................................... 18 Power Sector Reform in dLe 1980s . ............................................... 19 4. Structural Options for Power Sector Organization .............................................. 21 The Current Hybrid Structure ............................................... 21 Key Organizational and Institional Issues .......................................... ..... 22 Future Trend for Structural Reform ................ ............................... 22 5. Regulatory and Legal Framework ................................................ 25 The Current Situation and the Need for Regulatory Reform .................. ............ 25 Regulatory Responsibilities ............................................... 26 iii  JU 89 .......................................... suopdo fl a L UO 2!APV 'S 09 ..................................................... UOZ o JO1 S mod jojSU suoudo -t GS uU0J3> 21fl Jo SoAT,3aSqQ uITe%