Why do coal chemical projects \"board first and buy tickets later\"?

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Recently, media reports cited figures showing that out of the 53 modern coal chemical projects under construction across the country, 8 have not yet received approval from the Ministry of Environmental Protection. This means that these 15% of coal chemical projects under construction are actually illegal projects that were built without approval. As soon as these figures were released, others claimed that in fact, almost all coal chemical projects in the past started construction before obtaining all the necessary approvals. It’s absurd to think that the modern coal chemical industry, which takes energy security as its responsibility and aims for clean utilization, is actually an \"illegal\" industry that was built without proper approval. Why are so many projects built without approval first? It is still very necessary to carefully analyze the reasons why these projects are “illegal”. “We can’t afford it! ”“All “illegal” enterprises agree on this. As a capital- and technology-intensive industry, as well as one with particularly high environmental requirements, it is understandable that the construction of modern coal chemical plants requires various approval procedures. The problem is that China’s current project approval system does not require that approvals be issued within a set time limit; you cannot ask whether an approval will be given or when it will be granted, and it is impossible to find out such information. For a modern coal chemical project, it takes at least three to five years, or even longer, to obtain all the necessary approval documents. The Yankuang Yulin coal-to-oil project received approval from the National Development and Reform Commission as early as 2006, but it was not finally approved until September 2014. The approval process is slow; aside from the bureaucratic approach that focuses only on procedures rather than efficiency, there is another reason that cannot be voiced, and that is the lack of clarity regarding policies for the development of coal chemical industry, which makes it difficult to proceed. For the *staff members who hold the power to decide the fate of projects, there is no clear standard as to whether to approve them or not, or whom to approve and whom not to approve. Director Zhang said it belonged to the East side owners, while Director Li said it belonged to the West side owners; as efforts were made to find a balance, time was wasted. The problem is that companies can’t afford to wait. If construction is delayed until all procedures are completed, the various costs incurred during that time will not be taken into account, and the market will have already changed; in business terms, it’s too late by then. As a result, many companies are forced to act in violation of regulations, taking risks; they find ways around the rules by starting construction before obtaining the necessary approvals, hoping that by the time all the procedures are completed, the project will already be built, resulting in satisfaction for everyone. Once the timing is off, the company can only accept its misfortune. Due to the significant time delays, the Prime Minister explicitly demanded at a regular meeting of the State Council in early February this year that a system be established to ensure that approvals are processed within set time limits for such agencies. But for coal chemical projects, when will they be able to reap the benefits of such reforms? There are also some coal chemical enterprises that started construction without approval as a result of being forced to do so. Over the years, regions with coal resources have been actively attracting investment in an effort to turn these resource advantages into economic and developmental advantages, by bringing in external capital to exploit local coal resources. Even with low coal prices at the moment, advertisements aimed at attracting investment to coal-rich areas can still be found frequently in various media outlets. However, resource areas **are no longer, as they were several years ago, satisfied with simply extracting coal, selling it, and earning taxes from that. What they focus on now is the deep processing of coal and the on-site conversion of resources, in order to achieve greater economic benefits. Once a company secures the rights to exploit a coal deposit, it enters the fast track for project development. The local authorities keep pressing for progress, so that the resource advantages can be turned into economic benefits, government revenue, job opportunities, and achievements for their tenure in office. To this end, many places have issued regulations stating that if a party who has won the rights to coal mining fails to start construction within a certain period of time, the transferred coal mine as well as the allocated land must be taken back. This forces companies to consider that by not pursuing the project, they will be complying with national laws, but they will violate local regulations; as a result, they will lose the coal mines and land that they had managed to acquire, and all the efforts invested earlier to get those coal mines and land will have been in vain. As a result, many companies had to start projects without approval in order to retain their rights to resource extraction. The key reason why many coal chemical enterprises dare to start construction without approval is precisely the **leniency of authorities. Every modern coal chemical project not only requires investments in the order of hundreds of billions of yuan, but also exerts a significant impact on the economy and related industries; moreover, state-owned enterprises are involved in most such projects. Therefore, almost every coal chemical project is a “governor’s project” or a “mayor’s project”. As soon as the preliminary feasibility study for a project begins, the local authorities will find ways to push for its implementation ； Once the project is launched, it will be pushed forward to completion. Even if it is known that the construction was carried out without approval, the company will not be punished; on the contrary, every effort will be made to assist the company in advancing the project construction. A coal-to-oil project in Shanxi that failed to pass the environmental impact assessment was actually the “governor’s project” of Shanxi Province. It is said that the deputy governor in charge at the time monitored the progress of the project on a daily basis, while the governor checked it once a week. With a strong backing in place, these companies are not only unafraid to buy tickets first and then board the service, but they even dare to show off everywhere. In fact, **the approval department really has no choice. Take those 15% of \"illegal\" projects that have come to light so far – each one requires an investment of at least several billion yuan. By the time many projects were found to be “illegal,” billions of yuan, or even tens of billions of yuan, in investment had already been made. **What should I do? Turn it off; the majority of the investment comes from state-owned banks – whose loss will it be? Besides, since they are all state-owned enterprises, in the end the fines still go to the ** anyway, don’t they? In the end, all that can be done is to make makeshift fixes; what seems \"illegal\" is made to appear \"legal\" in order to get by. The views of one entrepreneur are quite representative. He said, “In most coal chemical projects, the amount of equity capital invested by the enterprises is less than 30%; the remaining hundreds of millions or even billions in investment come from state-owned bank loans.” With so much capital invested, if production isn’t allowed to proceed, who will bear the losses? Once it’s built, there’s always a way to start work. ” It is obvious that under the current economic management system, it is almost impossible to eliminate projects that are built without prior approval. There is a quite interesting phenomenon. To date, some coal chemical projects have indeed been halted, but none of them were stopped as a result of penalties for starting construction without approval; rather, it was because the market conditions had changed and it was no longer profitable to pursue coal chemical projects. This once again shows that what truly makes companies obedient is not **approval power, but the market.