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Supply crunch hits coal cradle

By Wan Zhihong (China Daily)
Updated: 2008-07-09 09:02

Workers check power transmission facilities in Lu'an, Anhui province. [China Daily]

Shanxi province, which produces one-fourth of China's coal, has witnessed approximately 5,000 mW of power shortages, the highest level recorded in recent years.

The province is currently facing a power shortage, which has reached as high as 4,600 mW. The power shortage has adversely affected the economy, said the provincial electricity regulator.

The province has an installed power capacity of 34,340 mW. However, power genertors with capacity of 3,500 mW halted production because of coal shortage, accounting for 15.2 percent, said the regulator.

"The tense situation caused by the coal supply and the rise in coal price has had a big impact on the province's power companies," said Li Fulong, director of the provincial price bureau.

According to Shanxi Province Electric Power Association (SEPA), this year coal production in the province will reach 680 million tons, up 9 percent compared with a year earlier. However, it still cannot catch up with the development of downstream business, such as power generation.

Coal companies in Shanxi have all increased their product prices this year. In the first quarter, the average coal price for the province's five leading companies stood at 377 yuan ($54.94) per ton, an increase of 13 percent compared with a year earlier, according to local statistics.

Power plants are witnessing their hardest time in history, said Li Jianwei, head of SEPA. In the first quarter, of the 20 major power plants in the province, 17 saw losses in their businesses.

As China's important coal production base, the problems with coal supply in Shanxi has also had an impact on other areas of China. In Zhejiang, local statistics showed the province had seen a power shortage of 3,000 mW. The power generation sector alone saw 12 million tons of coal shortage.

In the country's industrial hub, the Yangtze River Delta, 50 percent of coal consumption relies on Shanxi's production. Apart from power generation, lack of coal has also impacted other businesses such as steel manufacturing and fertilizer production.

This summer, some regions in China will see blackouts, according to the State Electricity Regulatory Commission. An official from the commission earlier told China Daily that in the summer, the gap between power supply and demand would be 16 gW.

Facing power shortages, coal companies in Shanxi will do everything in their power to try and ensure the supply in the province as well as in other areas. The province will also employ temporary price control measures for coal to help relieve power plants' difficulties, the local government said.