Buying Dinner for the Right Official Could Reduce Your Electricity Bill in China

April 21, 2015 Updated: April 23, 2015

Less than a month after China’s anti-corruption authorities set up shop at an electrical provider in Guangdong Province, they sacked four of the firm’s bosses, including the director.

Reports and interviews by mainland Chinese media show how bribery and graft became part of the Southern Power Grid Company’s standard operating procedure in all but name.

On March 6, the Communist Party’s anti-corruption commission sent a team to investigate the company. On the 30th, Qi Dacai, company director and one of the deputy general managers, along with two other executives, had been sacked for as-of-then unknown charges.

But the proverbial thunderstorm wasn’t over. On April 2, China’s Supreme People’s Procuratorate announced on its website that it had directed the Guangdong branch of the People’s Procuratorate to start an investigation into Xiao Peng, also a deputy general manager at the Grid Company.

Bribery seems to be high on the list of Xiao’s charges. The Grid Company reportedly sold positions and made shady deals with other firms by unscrupulously altering its electricity pricing.

An anonymous source told China Economic Daily that the price for getting a position within the company was very high even 7 or 8 years ago. It reportedly costs 1 million yuan (about $161,000) for the position of director at a power supply bureau and 3 million yuan (about $484,000) for a management position in the company.

Whoever purchased a position would be able to make the money back quite quickly; other industries, being dependent on the the power grid for electricity and transformer adjustments, are at the mercy of those in charge at the electrical provider.

A new factory, for instance, would have to file an application to receive electricity. Since providers are swamped with requests from the many industries that need service, there is usually a long waiting list.

“Naturally, a bribe could get you bumped up on the list. If not, you just have to wait until it is your turn,” the source told China Economic Daily.

One easy way of bribing the director of the Grid Company’s power supply bureau and the head of sales department was to treat them to dinner, after which the price of electricity might be reduced. 

“For example, the original electricity bill of 1 million yuan could be reduced to 100,000 yuan, while the [Grid] Company provides some kickback to these firm bosses in return. Now, with smart meters, things are more complicated,” the source said.

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