China feared to face worst power shortage in 7 years

By Kim Young-gyo
HONG KONG, May 25 (Yonhap) -- China could face its worst electricity shortage in seven years largely due to soaring coal prices, the country's leading power distributor said Wednesday.
In 2004, China experienced its worst power shortage in decades, as the supply of electricity did not keep pace with the robust growth of economic activities in industries, trade, commerce and offices. Power cuts or limits were imposed on 27 out of 31 provinces, municipalities and autonomous regions in China.
State Grid Corporation of China, the largest electric power transmission and distribution company in China, said in a statement that 26 provincial-level regions under its management would suffer from a shortfall of about 30 gigawatts this summer starting in June.
Regions that include Beijing, Tianjin, Shanghai and the industrial provinces of Hebei, Jiangsu and Zhejiang, will likely be hit the most by power shortages, the company said.
One of the main factors for the cause of the power shortages is the coal supply, which fuels nearly 80 percent of power output in the world's second-largest electricity producer after the United States.
Watchers attribute disruptions in coal supply to the gap between market-based coal prices and state-capped electricity tariffs. Stuck between coal prices and capped electricity prices, coal-fired power generators have been forced to lose money, they said.
Coal prices in China rose for a sixth week to the highest in more than two years on Friday. According to the China Coal Transport and Distribution Association, coal with an energy value of 5,500 kilocalories per kilogram gained 0.6 percent to a range of 815-825 yuan (US$128.4) per ton from a week earlier.
ygkim@yna.co.kr