Singapore (Platts)--31Jan2008

The delay in formulating a new energy law for China has led to the widely
expected ministry of energy unlikely to be set up in 2008, industry sources
said this week.
The first draft of the energy law, which called for the setting up of an
energy ministry, was ready late-2007 and was circulated for comments. But it
will not be ready for legislators to read and vote on by March when the annual
session of the National People's Congress will be held.
"2009 would be the earliest possible date for the NPC to read and vote on
the draft," China Daily reported last week quoting Ye Rongsi, deputy head of
the energy law drafting under the National Energy Leading Group.
The proposal has to take into consideration "the interests of all
stakeholders and parties governed by the energy legislation," Dong Chaojie,
deputy department director at the State Council's Legislative Affairs Office,
explained. Dong's office decides when to submit drafts to the NPC to vote on.
"It is difficult to balance the interests of various government bodies,
which currently manage the country's different energy sectors such as oil and
natural gas," the industry source said.
"For example, China's National Development and Reform Commission
currently has the authority to approve new oil projects and collect relevant
fees. However, this authority might be reallocated after the new energy body
is established," another source explained.
The most widely discussed suggestion was that the current Energy Bureau
under the NDRC could be restructured to become the new energy agency, which
could report to the National Energy Leading Group in the NDRC. Meanwhile, the
country should set up independent supervisory departments for electricity,
coal, oil and natural gas, apart from the ministry.
China had established a ministry of energy in 1988 to manage the
country's coal, oil and electricity sectors. However, officials from the then
oil and coal ministries strongly discouraged centralized management, with some
officials even signing a joint statement urging the termination of the energy
ministry. As a result, the ministry was shut in 1993 and the energy sector was
divided between various managements.
However, the call for an energy ministry was raised again in 1999. In
2003, the Development Research Center of the State Council proposed the
setting up of a national energy management body. In 2004, the central
government saw the importance of energy management to guarantee China's energy
security as the country's energy demand rose to become the second highest in
the world and oil imports accounted for 49% of China's needs.
--Staff, newsdesk@platts.com