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Nation continues to face tight coal supplies

By Wan Zhihong (China Daily)
Updated: 2008-07-01 13:40

The supply of coal used in power generation will continue to face a shortage, said an official with the China Electricity Council.

"The supply of coal, which fuels over two-thirds of China's power plants, is still tense nationwide, causing big pressure for the country's power plants as well as the total power supply in the country," said Xue Jing, director of the department of statistics and information under the China Electricity Council.

In Shandong province, local media reported that at present power plant reserves, which should usually have enough coal for at least 15 days of operation, only had reserves for 11 days.

As a kind of primary energy source, coal supplies will continue to face difficult times in the future, said Xue.

The relatively limited capacity of China's coal companies and transportation also caused the shortage, she said,

The summer, which is China's highest energy consumption period, will also bring about intense pressure on coal supplies, she said.

To ensure supplies, China sold less coal abroad in the first five months of the year, said the General Administration of Customs. Between January and May, China exported 18.5 million tons of coal, a decline of 4.1 percent from the same period last year.

But the export value rose 48.3 percent to $1.68 billion as the average price was up 54.68 percent to $90.8 per ton upon stronger demand worldwide.

Although the country announced it will raise the power tariff in July, this cannot totally offset power companies' losses mainly caused by rising coal price, said Xue.

"To power companies, this price hike can offset some 50 yuan increase in the coal price per ton, however, in some regions coal prices have increased by as much as 100 yuan per ton," she said.

The National Development and Reform Commission (NDRC) in July said electricity charges for commercial units would increase by 0.025 yuan per kWh from July 1.

But urban and rural residents and the farming and fertilizer production sectors were exempted from the increased electricity charges. Areas in Sichuan, Shaanxi and Gansu hit by the May 12 quake, too, have been exempted, the NDRC said.

The price of coal will be brought under government control temporarily, the NDRC said, because soaring coal price is the main factor behind higher electricity charges.