The State-owned Assets Supervision and Administration Commission (SASAC) offered 6 billion yuan ($965.4 million) to help China's big five State-owned electricity companies recover financially after coal prices spiked last year.
But coal prices dropped in the second half and these companies ended 2012 with an estimated 46 billion yuan in profits. It's unnecessary for the SASAC to keep funneling money into electricity companies. Right now, the government should continue to focus on market reforms to electricity by axing its unreasonable pricing mechanism.
As many know, the pricing of coal is determined by the market, while the pricing of electricity is dictated by the National Development and Reform Commission (NDRC). Under this regime, when the cost of producing electricity rises, electric companies are unable to charge more.
State planners have made some strides recently to shape up the energy market, but the next step needs to be dismantling the government's control of the industry.
The author is Mao Muzi, an economic commentator.
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