Investors said the reforms may speed up the acquisition of generation assets of these companies, including Huaneng Power International, Shandong International Power Development and Beijing Datang Power Generation, for expansion.

Under the reform package, the generation assets of the State Power Corp of China, which controls half of the nation's generation assets and all power grids, would be reshuffled to form three or four new companies to compete nationwide.

These newly established generation groups would also get the State Power's holdings in the listed companies.

The Huaneng Group, the largest subsidiary of the State Power, and parent of Huaneng International, would remain unchanged since it is big enough to compete already.

"The reforms will definitely benefit Huaneng, since it will facilitate Huaneng International's takeover of generation assets from its parent," said an analyst at Core Pacific-Yamaichi International. "But for Datang and Shandong International, things are a bit more uncertain."

Analysts have said that if they are not chosen to absorb parts of State Power's generating capacity, their shares could face a near-term sell-off. In the longer term, they could face tougher competition and fewer opportunities for asset growth.

Analysts said the risks are how many good assets could be placed into the new companies and how much they would pay for the assets acquisition.

Wang Xiaosong, vice-chairman of Huaneng Power International, told Business Weekly that the reform would bring them opportunities for expansion.

"We would never give up any chances for acquisition, including from the parent company," Wang said.

A State Development Planning Commission official said the assets buying, which has been forbidden since late 2000 when the reform plan was being drafted, will resume after the assets reshuffling and injection is completed this year.

Analysts said the restructuring would take a long time because the assets evaluation is laborious.

An ING Barings Securities analyst said new power groups may be created to list on markets, drawing funds from listed firms.

Another analyst with Worldsec Investment Consulting Company said he, too, would not rule out that possibility.

"Three or four new companies, plus Huaneng Group, that will be four or five competing companies," he said. "But there are only four listed companies, including the domestic-listed State Power Development. That means there may still remain one company to be listed."

The reform plan calls for State Power, owner of most of China's power transmission grids and half of its power plants, to be split into generators and grid corporations.

The power grids would be divided between two firms along north-south lines that would split their regions up among smaller companies.

Earlier media reports said the new grid company would be listed either on domestic or overseas markets.

The Worldsec analyst said he was not worried about fund evasion from the currently listed companies, saying the market is big enough to absorb more listings.

He also said electricity prices are expected to be lowered after the reform because the government will implement a power polling system that requires bids from power plants for selling their electricity to grids.

"Although the price is lowered, the earnings of listed companies will stay strong because their market shares will grow due to their lower cost and large scale," the analyst said.

And the government will try to maintain good profit returns for generation companies to encourage investment in the sector in a bid to meet the robust demand growth, he said.

China aims to increase its generation capacity by 21.8 per cent to 390 million kilowatts by 2005.