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Power sector better equipped to handle summer shortages: Regulator

(Agencies)
Updated: 2008-04-22 14:56

China's power sector is better equipped this year to deal with the annual shortages during the summer months, said Wang Yeping, vice-chairman of the State Electricity Regulatory Commission (SERC).  

Wang, speaking to reporters, said the gap between capacity and actual demand this year is projected at only 1,000 megawatts this summer, a marked improvement compared with previous years.

Wang brushed off suggestions that China is facing another supply crisis during the summer peak consumption period, saying that while cuts could still occur, particularly in the industrialized province of Guangdong in the southeast, they would not last long.

He said that the damage inflicted on China's power infrastructure by the heavy winter storms had now been almost completely repaired, and that the grid networks allowing Guangdong to source power from the neighboring region of Guangxi had also been put back in full operation.

For several years, high-consuming regions like Guangdong, coastal Zhejiang and Sichuan in the southwest have been hit by severe power shortages during summer and winter, prompting the government to approve a massive construction program which has seen capacity increase by 100,000 megawatts a year since 2005.

In 2007, total capacity rose by 100,090 megawatts, SERC revealed in its annual power sector report, released today.

However, analysts have suggested that seasonal shortages this summer could be made worse because of the government's refusal to raise power tariffs.

Record high coal prices, coupled with the impact of the winter storms, have meant that 40 percent of China's electricity producers operated at a loss in the first two months of this year, according to the China Electricity Council.

Wang said that although a power tariff hike would certainly improve the fortunes of the power sector, the government still had to consider the impact of price rises on the economy as a whole, and particularly on the rate of inflation.

"Because the power price is a fundamental price in the national economy, it must lead to a chain reaction and could push the already high CPI even higher," he noted.

In order to reduce costs, power plants across the country have been operating with dangerously low coal stockpiles.

Wang said that after recovering in late February as a result of active government encouragement, coal stockpiles at China's big power plants have again begun to plummet, dropping by 12 percent since the beginning of March.

"We are actively cooperating with the State Council and other departments to handle this problem," he said.

Analysts have said that the "structural" problems in China's power sector could again be exacerbated in the summer by freak weather, with widespread droughts expected to slash hydropower output and put even more pressure on the country's coal supplies.