On The Disposal Of Non-performing Assets Of Sm Electric Power Company Limited

To meet the requirements of the socialist market economic system, China has promoted electric power system reformation, and introduced competitive mechanism since 1998, which motivates the sustainable and healthy development of electric power industry. After power plants were separated from power grid corporations in the end of 2002, power plant monopoly has been smashed step by step, and then five new founded power generation groups form the competition, and all of them gradually improve capacity, extend market, optimize management and then increase the profits. However, while the reformation goes further, the investments of some power plants in "power plants and grid in one" period (before reformation) have become non-performing assets for the lack of management and profit, because the grids and power plants belong to different interest groups, and also power plants belong to different power generation groups.The case in this article is SM Power Co., Ltd.. SM now belonging to China A Power Generation Groups had more than 10 investment projects when it was hold by Sichuan Electric Power Corporation before Electric power system reformation. After reformation, some investment projects lost their good business environment and priority and then were operated at a loss, and formed non-performing assets and even had bad influence on corporation's survival and development. SM Corporation had various measures to deal with the non-performing assets. SM's subsidiary company JN power plants brought big loss to SM for "One Plant with Two Systems" Pattern forming after "power plants separated from grid". Because it related to A and B Power Generation Groups and hundreds labors, the disposal of assets was hard and had no effective measure for a long time.This article is based on non-performing assets theory and uses management theory and analysis methods including the theory of leased assets, assets restructuring, closing down policy, assets appraisal, financial analysis, statistical forecasting to choose a suitable assets disposal and deal with JN's "One Plant with Two Systems" in order to increases the SM's economic benefit and promote healthy development. This study has practical significance and reference value for the similar problems among Power Generation Groups or local power groups.The Chapter One and Two explain this study's background and purpose, review and summarize the theory of disposal of non-performing assets and state-owned property; The Chapter Three and Four introduce SM Corporation and analyze its subsidiary company JN Power Plants "One Factory Two systems" problem's formation and influence and point out its potential adverse effect; The Chapter Five makes compare among five solutions; The Chapter Six outlooks the future and development of SM after disposal of non-performing assets.The conclusion is that Sichuan province has rich hydroelectric resources but limited thermal power development, its thermal power plants with capacity below the 30KW in "One factory and Two systems" pattern are more suitable for close down policy; and For provinces having rich coal resources and mainly thermal power, asset transfer, lease or restructuring are more appropriate way to achieve more profits.