China is to raise the electricity price for companies with high energy consumption in the coming three years in the hope of restricting their development.

The National Development and Reform Commission (NDRC) announced on September 30 that the electricity price would rise from the present five cents to 20 cents for some of those companies in the coming three years.

The price hike, starting from October 1, would be carried out in three steps, with the other two on January 1 of 2007 and 2008 respectively.

The NDRC predicted that the price hike would raise the cost of concerned companies by more than 5 percent every year and force most of them out of the market in three years.

In order to avoid blind growth of industries with high energy consumption, the NDRC adopted different electricity prices for six industries of electrolytic aluminum, ferroalloy, calcium carbide, caustic soda, cement and steel in 2004.

By last May, 30 provinces, autonomous regions and municipalities in China besides Tibet had adopted the policy.

But as the difference is not so big and local governments have strong incentives to boost the local economy, the policies did not work well.

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