BEIJING, April 25 (Reuters) - The State Grid Corp of China (SGCC), the country’s largest power transmission and distribution firm, plans to sell a coal and power generation unit with assets worth about 50 billion yuan ($7.9 billion) to Shenhua Group, sources told Reuters on Wednesday.
The sale of State Grid Energy Development Co Ltd has yet to be approved by the State-owned Assets Supervision and Administration Commission (SASAC), according to the sources who were familiar with deal but were not authorized to publicly announce it.
“The divesture conforms to State Grid’s plan and will strengthen Shenhua’s competitive advantage in thermal power generation,” one source said.
It was not clear whether the whole unit or just part of it would be transferred to Shenhua, another source said.
The reason for the planned sale was not immediately clear. SGCC is normally disinclined to spin off its huge and complex businesses, which include power transmission, distribution, construction, equipment manufacturing, finance, trusts, insurance and media.
Shenhua Group is the parent of China Shenhua Energy Corp Co Ltd , which runs a big network of power plants and produces the largest volume of coal among Chinese miners.
State Grid Energy Development Co had 55 billion yuan of assets at the end of 2011, accounting for about 2.5 percent of SGCC’s total. The unit made a net profit of 78 million yuan last year on revenue of 18.9 billion yuan.
State Grid news department officials could not immediately comment, and a news official with Shenhua denied having any knowledge of the deal. Government officials at SASAC were not available for comment.
$1 = 6.3073 Chinese yuan Reporting by Su Dan and Ken Wills