China to Raise Price of Electricity

Date

Jun 17, 2008

Country

China

Category

IndustrialsMarket


The National Development and Reform Commission, other government departments and the head of major electricity enterprises recently held a conference and discussed the price of electricity. The power enterprises have proposed that the Chinese Government should raise the price three times if it is to close the current power price gap of RMB0.05/kWh.

Although the Chinese Government released a notice in May requiring that small-scale coal mines resume operations as soon as possible, the price of coal has been surging since the beginning of June. For example, the price of Datong quality mix coal at Qinhuangdao Port with calorific value of 6,000kcag/kg GAR stood at RMB820/t on June 10th, marking a new record. At the same time, due to the significant increase in the price of coal on the market, some coal enterprises have broken their key electrical coal contracts signed with power enterprises at the beginning of the year and have raised the contractual coal price.

According to the statistics released by the China Electricity Council at the end of May, the high coal cost has resulted in the five large Chinese power enterprises to incur total losses of RMB2.7bn. Wang Yonggan, spokesman of the China Electricity Council, also pointed out that the power supply shortage during the peak summer period will hit 10 million kW.

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