Many China power plants face closure amid coal shortage

Business Times 13 Jan 10;

(BEIJING) Dozens of Chinese power plants are running out of coal and might be forced to shut down this week as bitter winter cold boosts demand and snow hampers delivery of new supplies, state media said yesterday.

Factories have been closed in parts of central China where power demand exceeds supply but analysts said they expected no immediate impact on the economy. No power cuts to homes have been reported.

Among 598 major power plants, 11 per cent have less than three days of coal and 'would shut production at any time', the Xinhua news agency said. It gave no details of where they are located but that percentage would be equal to 66 generating stations.

In hard-hit Hubei province, the authorities have cut power demand by about 10 per cent by closing small factories and ordering others to operate only three days a week, said an official of the provincial economic commission. He would give only his surname, Liu. Hubei lost part of its generating capacity last week when two plants shut down due to technical problems.

Hubei officials are visiting neighbouring regions to buy coal or power, Mr Liu said. 'This coal shortage cannot be solved in one or two days.'

Spokesmen for the country's planning agency, the Cabinet's National Development and Reform Commission (NDRC), referred questions to the government electricity bureau, which referred questions to the NDRC.

Power demand spiked last week after storms dumped snow on China during the coldest winter in decades. Many families, especially in the south, lack central heating and rely on electric space heaters.

Chinese analysts said they foresaw no major economic impact from the power rationing. 'My hunch is that this will have a bigger impact on food and vegetable prices than on industry, because the first quarter is not the peak demand period for factories,' said Lu Zhengwei, senior economist for Industrial Bank in Shanghai.

China regularly suffers such power crunches because operators let coal stockpiles run low when fuel costs rise. China relies on coal for 70 per cent of its power. Spot coal prices have risen 40 per cent since September, according to Citigroup. Heavy snows have blocked roads and ports, hampering the delivery of new supplies.

Some power plants have cut output in the central provinces of Hebei, Jiangxi and Hunan, in Liaoning in the northeast and in the industrial metropolis of Chongqing in the southwest, Citigroup analysts said in a report.

Temperatures are expected to fall again this week. -- AP