China officially unveiled a new government agency to take charge of the country's energy policy earlier today.

Chinese premier Wen Jiabao will head the new agency, known as the National Energy Commission (NEC) or 國家能源委員會 (guójiā néngyuán wěiyuánhui) in Chinese, while Li Keqiang, vice premier and the man tipped to replace Wen during a leadership shuffle that's predicted to take place in late 2011, will serve as the commission's deputy director, according to an announcement posted on the website of Chinese central government on January 27.

The seniority of the new commission's leadership and membership is a sign that the authority of the new body will out rank that of other individual ministries and commissions.
The new agency's major obligations will be to research and formulate national energy development strategy and review major issues concerning the country's energy security and development. The commission will also be in charge of making plans for the coordination of the domestic energy development as well as expanding international cooperation.

The new commission will be made up of 21 members representing many of the existing energy-related ministries and commissions, as well as officials from the central bank and an official from the military's general staff headquarters.

The new commission will replace the existing National Energy Administration's (NEA), which was established in July 2008 and is currently run as an administration under the control of the NDRC.

According to officials within the NEA ,the current body lacks the ability to implement a unified energy policy, as responsibility for the energy sector is currently dispersed among a number of departments, including the NDRC, the Ministry of Commerce, the Ministry of Land and Resources, the State Electricity Regulatory Commission (SERC) and the State Administration of Work Safety.

At the national energy work meeting held in early February 2009, Zhang Guobao, the current head of the NEA, repeatedly referred to the many difficulties that the NEA was having in governing the country's energy sector. Zhang complained that the NEA lacked the tools and resources to effectively administer and supervise the energy industry.

He also noted that, of the five licenses that businesses require to enter the coal mining industry, not one of them was issued by the NEA.

A source from the SERC, said despite the NEA's desire to play a bigger role in reforming the electricity, coal and oil sectors, almost all the issues related to the reform of these industries came back to price reform and market access, areas over which the NEA has little control.

The Energy Industry Ministry was dissolved during a round of departmental restructuring in 1993, meaning that China hasn't had a unified ministry devoted to administering the energy sector for 16 years.

The Economic Observer first reported on the likely establishment of the new commission in December last year.

Links and Sources
State Council: Announcement (Chinese)
Economic Observer: China to Establish New National Energy Commission