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More curbs on coal for electricity

By Wan Zhihong (China Daily)
Updated: 2008-07-25 09:23

The government will further enforce the price controls on coal used for power generation, in a move to keep the prices in line and to ensure supplies for thermal power plants.

"Thermal coal port prices at Qinhuangdao, Tianjin and Tangshan, the three major ports or transshipment centers, cannot surpass the levels on June 19, which stood at 860 yuan, 840 yuan and 850 yuan respectively for 5,500 kcal/kg grade thermal coal," said the National Development and Reform Commission (NDRC) in a statement yesterday.

Now thermal coal prices at Qinhuangdao port have surpassed 1,000 yuan per ton, doubling the level at the beginning of the year.

On June 19, the government announced it would take temporary price control measures for coal. The move was aimed at relieving the financial burden of power producers.

"After the move, the rise in thermal coal prices has been effectively controlled," said the NDRC. "However, some coal contracting prices still increased."

Soaring coal prices continue to be the major problem for China's power producers. All the five leading power companies expect to see losses in their power generation businesses.

Huaneng Power International Inc, the listed arm of the country's largest power company China Huaneng Group, said earlier it would see losses in the first half, despite a 13.43 percent increase in power generation during the period.

Huadian Power International Corp, the listed arm of China Huadian Corp, has also said it expects to see losses in the first half in spite of a 65 percent growth in electricity production.

Shanghai Electric Power Co, which suffered the heaviest losses, forecast 560 million yuan in losses in the first half, compared with a net profit of 211 million yuan during the same period of 2007.

Because of the soaring coal prices, China's leading power producers have all begun to eye clean energy. China Huaneng Group is now developing wind power plants in provinces such as Hainan, Guangdong, Jilin and Shandong, and the Inner Mongolia autonomous region. Huaneng is also quickening its development of hydropower and nuclear power.

The government raised the electricity tariff by 0.025 yuan per kWh from July 1. However, some analysts said the rise could not offset power companies' losses.

Some analysts said the price increase, however, could only cover 15 percent of the losses in coal-fired plants.

China's major power plants produced 1.68 trillion kWh of electricity in the first half of this year, a year-on-year increase of 12.9 percent, said the China Electricity Council.

This summer the country will see 16 gW of power shortages, according to the State Electricity Regulatory Commission.