The "Implementation Opinions on Encouraging and Guiding Private Capital to Further Expand Investments in the Energy Sector" has ignited the enthusiasm of private enterprises to participate in the energy industry, but it still needs to rationalize several issues.
Since the reforms that changed China’s destiny that started in Xiaogang Village, there has never been a shortage of reforms in China. The energy sector is no exception. For example, the topic of public capital that is now being heated up has entered the energy sector.
As early as 2005, the State Council issued the "Suggestions on Encouraging and Guiding the Development of Private-Owned and Non-Public Ownership Economy". The folks gave this "opinion" an image name - "36". Five years later, the "new 36" was born. The "State Council's Opinions on Encouraging and Guiding the Healthy Development of Private Investment" was issued. On June 20, 2012, the National Energy Administration issued the “Implementation Opinions on Encouraging and Guiding Private Capital to Further Expand Investments in the Energy Sector†(hereinafter referred to as “Opinionsâ€), referring to the construction and operation of energy projects, exploration and development of energy resources, and oil refining. The field will be further open to private capital.
The “Opinions†clearly proposes encouraging qualified private enterprises to participate in the construction and operation of national key energy projects in various forms, encourage private capital to participate in the exploration and development of energy resources, and more explicitly put forward that private capital can be used to build and operate large-scale refinery projects in various forms. Part of the device or the specific production process. Although this is an improvement over the past, it must be implemented in real time but it will bear fruit.
To really advance reforms, we must straighten out a few key issues.
First, to encourage private capital to participate in the exploration and development of energy resources, it is necessary to reform the examination and approval process, the threshold for approval should be lowered, and the procedures for examination and approval should be simplified.
Some people may ask: Oil and natural gas are the country's key pillar industries. Will there be a large number of non-strength private enterprises entering and exiting the examination and approval threshold, which will lead to disorderly market competition? The author thinks that the high threshold is instead the main reason that hinders the difficulty of marketization in the oil and gas sector. Taking shale gas as an example, the government has already introduced policies to encourage private enterprises to enter the field of shale gas extraction. However, it has not yet been heard that private enterprises have achieved much in shale gas extraction. One of the reasons for this is the approval system. Article 16 of the “Mineral Resources Law†stipulates: “The exploitation of specific types of minerals such as oil, natural gas, and radioactive minerals may be approved by the relevant competent authority authorized by the State Council and a mining permit issued.†In fact, only a few major state-owned enterprises have permits. Permit, and the conditions for obtaining qualifications for development are very vague. Many SMEs are not very clear about how to achieve the qualifications. How can they obtain mining licenses?
Second, to encourage private capital to participate in project construction and operations, it is necessary to reform the current energy price formation system.
At present, China's bulk energy products are still government pricing or guidance pricing. The price is controlled by the government and cannot be brought into line with the market. The inevitable consequence is that there are too many uncertainties in the profitability. Taking shale gas as an example, natural gas has not yet achieved marketization of prices in China and there is no corresponding financial product management risk. Although natural gas price reform has been piloted in individual provinces, natural gas spot trading has been officially listed on the Shanghai Petroleum Exchange in early July, but the pricing of natural gas is still controlled by the government. Private enterprises must enter the field of natural gas or shale gas exploitation. Product prices cannot be brought into line with the market, there is no risk controllability, there is no guarantee of profit, and naturally there is no enthusiasm for participation in development. After all, investment is to consider profitability.
Third, to encourage private capital to develop the oil refining industry, it is necessary to reform several key areas of policy, such as crude oil import policy. Although crude oil imports have been reformed several times, it has not yet been released. This essentially blocked the access to crude oil imported by private refineries. Encouraging private enterprises to develop the oil refining industry, but not solving the problem of raw materials at the source, is undoubtedly an increase in entry barriers in disguise.
Finally, it is necessary to encourage private capital to build and operate certain devices or specific production links in large-scale oil refining projects in various forms. It is necessary to reform the corresponding laws and regulations. For example, how to determine the property rights of private enterprises and how to protect them need to be given sufficient attention. Because private capital participates in the investment construction and operation of large-scale projects, the issue of property rights needs to be clearly defined. A few days ago, Chongqing Fuling District Government introduced management measures, including the “refueling station is valid for 30 years, the operation of the government expires without compensation†policy caused a loss. Similar issues like this are not resolved from the legal level, and private capital will be very cautious when it comes to large-scale projects.
Therefore, in order to fundamentally promote private capital to enter the energy sector, apart from the introduction of good policies at the central level, it is more necessary for the relevant departments and local governments to cooperate closely.
Since the reforms that changed China’s destiny that started in Xiaogang Village, there has never been a shortage of reforms in China. The energy sector is no exception. For example, the topic of public capital that is now being heated up has entered the energy sector.
As early as 2005, the State Council issued the "Suggestions on Encouraging and Guiding the Development of Private-Owned and Non-Public Ownership Economy". The folks gave this "opinion" an image name - "36". Five years later, the "new 36" was born. The "State Council's Opinions on Encouraging and Guiding the Healthy Development of Private Investment" was issued. On June 20, 2012, the National Energy Administration issued the “Implementation Opinions on Encouraging and Guiding Private Capital to Further Expand Investments in the Energy Sector†(hereinafter referred to as “Opinionsâ€), referring to the construction and operation of energy projects, exploration and development of energy resources, and oil refining. The field will be further open to private capital.
The “Opinions†clearly proposes encouraging qualified private enterprises to participate in the construction and operation of national key energy projects in various forms, encourage private capital to participate in the exploration and development of energy resources, and more explicitly put forward that private capital can be used to build and operate large-scale refinery projects in various forms. Part of the device or the specific production process. Although this is an improvement over the past, it must be implemented in real time but it will bear fruit.
To really advance reforms, we must straighten out a few key issues.
First, to encourage private capital to participate in the exploration and development of energy resources, it is necessary to reform the examination and approval process, the threshold for approval should be lowered, and the procedures for examination and approval should be simplified.
Some people may ask: Oil and natural gas are the country's key pillar industries. Will there be a large number of non-strength private enterprises entering and exiting the examination and approval threshold, which will lead to disorderly market competition? The author thinks that the high threshold is instead the main reason that hinders the difficulty of marketization in the oil and gas sector. Taking shale gas as an example, the government has already introduced policies to encourage private enterprises to enter the field of shale gas extraction. However, it has not yet been heard that private enterprises have achieved much in shale gas extraction. One of the reasons for this is the approval system. Article 16 of the “Mineral Resources Law†stipulates: “The exploitation of specific types of minerals such as oil, natural gas, and radioactive minerals may be approved by the relevant competent authority authorized by the State Council and a mining permit issued.†In fact, only a few major state-owned enterprises have permits. Permit, and the conditions for obtaining qualifications for development are very vague. Many SMEs are not very clear about how to achieve the qualifications. How can they obtain mining licenses?
Second, to encourage private capital to participate in project construction and operations, it is necessary to reform the current energy price formation system.
At present, China's bulk energy products are still government pricing or guidance pricing. The price is controlled by the government and cannot be brought into line with the market. The inevitable consequence is that there are too many uncertainties in the profitability. Taking shale gas as an example, natural gas has not yet achieved marketization of prices in China and there is no corresponding financial product management risk. Although natural gas price reform has been piloted in individual provinces, natural gas spot trading has been officially listed on the Shanghai Petroleum Exchange in early July, but the pricing of natural gas is still controlled by the government. Private enterprises must enter the field of natural gas or shale gas exploitation. Product prices cannot be brought into line with the market, there is no risk controllability, there is no guarantee of profit, and naturally there is no enthusiasm for participation in development. After all, investment is to consider profitability.
Third, to encourage private capital to develop the oil refining industry, it is necessary to reform several key areas of policy, such as crude oil import policy. Although crude oil imports have been reformed several times, it has not yet been released. This essentially blocked the access to crude oil imported by private refineries. Encouraging private enterprises to develop the oil refining industry, but not solving the problem of raw materials at the source, is undoubtedly an increase in entry barriers in disguise.
Finally, it is necessary to encourage private capital to build and operate certain devices or specific production links in large-scale oil refining projects in various forms. It is necessary to reform the corresponding laws and regulations. For example, how to determine the property rights of private enterprises and how to protect them need to be given sufficient attention. Because private capital participates in the investment construction and operation of large-scale projects, the issue of property rights needs to be clearly defined. A few days ago, Chongqing Fuling District Government introduced management measures, including the “refueling station is valid for 30 years, the operation of the government expires without compensation†policy caused a loss. Similar issues like this are not resolved from the legal level, and private capital will be very cautious when it comes to large-scale projects.
Therefore, in order to fundamentally promote private capital to enter the energy sector, apart from the introduction of good policies at the central level, it is more necessary for the relevant departments and local governments to cooperate closely.
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