BEIJING, Jan 23, 2008 -- XFN-ASIA

The State Grid Corp has asked the Chinese government to provide more assistance in handling the current power supply crisis, and to do all it can to boost the delivery of coal to key regions, according to Shanghai's China Business News.

In a document submitted to the state regulator, the National Development and Reform Commission (NDRC), State Grid called on the government to use "supply-side management" to solve the problem, which has led to power rationing throughout central and southern China.

The shortages have also spread to northern China, with power plants in the major coal-producing province of Shanxi forced to operate below capacity, according to the local power grid.

In a response published on its website today, the NDRC urged coal and power producers to coordinate better with the railways and ports in order to avoid shortages during the peak winter consumption period. It also called upon the transportation sector to organize deliveries more effectively.

It said that the efforts to improve safety in the coal industry had created supply problems, and also blamed the weather for disrupting coal deliveries in recent weeks.

It also used the shortages to call for a more rapid transformation of China's high energy-consuming economy.

The NDRC has promised to help guarantee coal supplies to major power generators, and has also ordered the suspension of deliveries for coal not used in power generation.

According to figures from the State Grid, the national power coal stockpile stood at 17.73 mln tons on Jan 20, down more than 40 pct year-on-year. It can guarantee only 8 days of electricity generation. The stockpiles for the central Chinese power grid, where shortages are particularly pronounced after weeks of poor weather, stood at only 5.57 mln tons, half the normal level and capable of guaranteeing only 7 days of consumption, said the report.

Seventy pct of all coal deliveries are made by truck, but weather problems, coupled with the increase in fuel costs from last November, has significantly reduced road freight in recent months. After a series of blackouts and power rationing throughout China during the peak consumption periods of 2004 and 2005, the government fast-tracked the construction of a new series of thermal power plants.

However, in the wake of a nationwide campaign to shut down small, unsafe and inefficient mines, it is coal and not generation capacity that has become the biggest problem for the industry.

Power shortages for this year are expected to stand at around 8,000 MW of capacity, exceeding the record of 6,260 MW set in 2005, China Business News said.

Thirteen provincial power grids have already imposed restrictions on the consumption of electricity, with shortages currently amounting to the equivalent of 6,963 MW, according to the China Electricity Council.

david.stanway@xinhuafinance.com

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