State Grid denies rumors about exorbitant profits

16:40, May 20, 2011      

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During the 14th High-tech Expo Energy Sources Strategy Forum on May 19, an official from the State Grid said that public calls for the highly-profitable State Grid to take responsibility for the electricity shortage and surrender part of its profits are unfounded.

Shu Yinbiao, vice president of the State Grid Cooperation of China, told a Beijing Times reporter that considering the national power grid system owns 2 trillion yuan worth of assets, 40 billion yuan in profits is far from exorbitant. The electricity shortage is mainly caused by the supply-demand relations, and it has nothing to do with the profit of the grid, Shu said.

Recently, word spread that the State Grid makes exorbitant profits by squeezing the profit of other electrical enterprises, which led to the electricity shortage. According to the State Statistics Bureau, in all but the last month of 2010, the business income of the grid was 2.19 trillion yuan, accounting for 65 percent of the entire electric power sector. The realized profit is 59.2 billion yuan, which is an 18-fold increase from a year earlier.

Shu said the amount of profit relative to the company's total assets is very low among state-owned enterprise (SOE). As for the electricity shortage, he thinks the primary cause is the supply-demand relations, and it has nothing to do with the profit of State Grid. The State Grid will reinforce power grid construction in order to resolve the shortage. However, it is noteworthy that when lots of fire-powered electric enterprises are recording losses, the State Grid still enjoys a fat profit.

According to data from the State Electricity Regulatory Commission, the electric price difference of the grid is 0.2 yuan per kilowatt-hour. In the year 2010, the average electricity purchase price for the main grid enterprises is 383.89 yuan per kilowatt, compared with the sale price, which is 571.44 yuan per kilowatt, meaning there is a 187.55 yuan price difference.

It is even more noteworthy that, according to SERC's data, labor costs account for 19.2 percent of the cost structure of the State Grid.

By People's Dailyl Online

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