World’s largest power utility formed as merger approved

The Chinese government has approved the merger of state-owned energy groups China Guodian and Shenhua Group to form the world’s largest utility by capacity.

China Guodian is a power producer while Shenhua is a coal company. Their merger brings together $236bn worth of assets.
Merger scrabble
The State-owned Assets Supervision and Administration Commission, the watchdog for state-owned enterprises, announced the approval of the merger on Monday

The merger comes as China seeks to address growing overcapacity in the sector.

Shenhua Group, which willà‚ change its name to China Energy Investment Corp., will absorb Guodian Group and become the parent of the reorganized entity, the listed units of both companies said in separate Hong Kong filings.

The listed companies are also forming a coal-fired power joint-venture, which is subject to shareholder and regulatory approvals.

The new company will have installed capacity of more than 225 GW, topping Electricite de France SA and Enel SpA, in terms of world capacity rankings.

The merged entity will account for 13 per cent of both China’s power-generating and coal-mining capacity, according to Bloomberg.

Beijing is attempting to reduce its reliance on coal power and increase the use natural gas, as well as wind, solar, hydropower and nuclear. The generation capacity of the merged company will be 23 pe rcent renewables, according to BNEF.

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