Beijing Approves Restructuring of Nuclear Power Firms

China National Nuclear Corp, China’s No. 2 nuclear power producer, will take over the country’s top nuclear power plant builder to create a company worth almost $100 billion, the latest state-orchestrated marriage in the nation’s vast power sector.

The deal has been in the works for almost a year as Beijing has pushed to streamline its bloated state-owned enterprise sector, tackle rising corporate debt and make businesses more profitable through mergers, reductions in excess capacity and the closure of “zombie” firms, Reuters reported.

Approval for the tie-up between CNNC and China Nuclear Engineering & Construction was announced by the State-Owned Assets Supervision and Administration Commission on Wednesday in a one-line statement posted on its website.

In a filing later on Wednesday, CNEC’s listed unit said its controlling shareholder will be CNNC after the deal.

The combined company would have assets worth more than 620 billion yuan ($99 billion) and a workforce of almost 150,000, according to Reuters’ calculations based on data on the firms’ websites and in company filings.

Beijing wants to overhaul its nuclear sector to create globally competitive firms and reduce overcapacity across its broader power market. The nuclear industry is struggling with project delays and a slowdown in approvals for new domestic projects.

By creating a unified home-brand series of reactors and combining firms, China will be better positioned to bid for and finance overseas projects, experts say.

Both companies have built nuclear plants overseas, including in Pakistan, and developing Chinese nuclear technology abroad is a key goal of China’s Belt and Road initiative.

“(The) merger ... will give the new company vast financial firepower to take on the significant capital costs involved in developing new nuclear reactors, both domestically and abroad,” said Georgina Hayden, the head of power and renewables at BMI Research.

This deal will reduce the number of enterprises administered by the central government to 97, compared with 117 in 2012.