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Power plants, coal suppliers urged to cooperate

(Xinhua)
Updated: 2008-08-09 22:50

BEIJING - The China Electricity Council (CEC) has urged coal producers and power suppliers to cooperate to cope with expected power shortages during the second half of 2008.

These shortages could reach 15 million kw per day, mainly due to tight thermal coal supplies, the CEC said in a statement posted on its website Friday.

The CEC represents power producers.

Thermal coal prices have risen amid increasing demand from coal-fired power plants, which supply 80 percent of China's electricity.

Prices at the coal market in Qinghuangdao, Hebei Province, a major coal supply center, exceeded 1,065 yuan (about US$155) per tonne in July, up 115 percent year-on-year.

Thermal coal use this year could surge 11.5 percent year-on-year to about 1.6 billion tonnes, indicating the possibility of tighter supply, said the CEC.

Power producers "have felt the pinch of soaring coal prices. But they found it difficult to get high-quality thermal coal, most of which has been taken up by other industries," said coal expert Li Chaolin, of Coalmarketweb.com, a coal information site.

The CEC suggested that coal producers and power plants take advantage of China's efforts in energy reform. They should cooperate in balancing supply and demand, especially over the long term, it said.

The China National Development and Reform Commission, the top economic regulator, raised retail electricity prices by 0.025 yuan per kw/hr on July 1, to about 0.5 yuan per kw/hr. But the increase will only cover 15 percent of coal-fired power plants' losses, according to market experts.

The top five power producers' combined profits were more than halved in the first half because of higher coal prices.

In response to claims by some analysts that coal supplies were tight mainly because China has been shutting small mines, the State Administration of Work Safety (SAWS) deputy director Wang Dexue expressed disagreement on Saturday.

"China had shut 11,155 small coal mines by 2007, which involved a maximum annual output of 200 million tonnes. However, newly installed production capacity was far more than that," said Wang.

The country was trying to emphasize large-scale coal mines to ease supply problems and improve work safety, he said.

According to SAWS, there were 1,013 coal mine accidents in China in the first seven months of this year, claiming 1,631 lives. That represented a steep decline from the 1,368 accidents and 2,154 deaths recorded during the same period last year.