China state-owned firms get gov't funds for natural disaster impact
28/11/2008 16:39
China will allocate 19.63 billion yuan (US$2.87 billion) to the
state-owned enterprises (SOEs) most affected by two major natural disasters this
year, electricity giant State Grid said in Beijing today.
The funds are part
of a state budget totaling 54.78 billion yuan released by the State-owned Assets
Supervision and Administration Commission (SASAC), a branch of the State Council
(cabinet), this week.
Distribution details will be announced "soon", SASAC
said.
National electricity suppliers sustained heavy losses during weeks of
severe winter weather early this year and in the May earthquake in the
southwestern Sichuan Province. The suppliers expected to benefit from the
government support include State Grid, China Southern Power Grid, Dongfang
Electric (based in the quake zone) and major power plants.
State Grid alone
reported 22.45 billion yuan in losses attributable to the disasters. It said it
needs about three times that much, or 74.6 billion yuan, to rebuild
fully.
China Southern Power Grid said its losses exceeded 20 billion
yuan.
Analysts said the budget allocation of less than 20 billion yuan will
only cover a small part of the reconstruction cost. The companies will have to
raise the remainder themselves. Nevertheless, analysts said, it showed the
government's support for SOEs.
The reconstruction allocation accounts for 36
percent of the budget. About half of the financial support, or 27 billion yuan,
will reinforce state-owned capital and help key SOEs expand. The remaining 8.15
billion yuan is for SOEs' industrial restructuring, SASAC figures
indicate.
As of 2008, China is determining the state-owned capital budget
from annual dividends it gets from the SOEs' profit.
This system reflects a
change last year that returned the SOEs' financial relationship with the
government to pre-1994 rules. Between 1994 and 2007, the SOEs received a budget
from the state but weren't required to share their profits.
Under trial
regulations issued by the State Council last year, SOEs are classified into
three categories for the purpose of sharing profits in the form of dividends
paid to the state. The rate for resource-sector companies is 10 percent, while
for other SOEs is 5 percent.
Military industry firms don't have to
participate in the system for at least three years.
Xinhua
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