China's five major power generating groups unanimously called for electricity price rises at a meeting held at the State Electricity Regulatory Commission (SERC) on Tuesday as they posted losses resulting from higher coal costs in the first quarter, the Beijing News reported.
"If the government does not raise power tariffs along with the rising coal prices, the power companies won't survive," the newspaper reported citing an unidentified source.
Huaneng Power International Inc said first quarter net profit fell 79.95 percent year-on-year to 241.94 million yuan ($34.63 million) on higher fuel costs, which offset a rise in electricity output.
China Power Investment Corporation generated 64.3 billion kilowatt-hours of electricity in the first four months, up 10.5 percent year-on-year. Rising coal prices cost the power giant an additional 1.45 billion yuan more than the same period last year.
"Datang Power as a whole suffered losses for the first time in five years. Ten of its coal-fired power plants have reserves of coal for power generation dropping to fewer than three days, accounting for 17.5 percent of the total," said Fang Xiao, director of Datang's marketing and sales department.
Wang Xinan, deputy director of marketing and sales department at Huadian Power, said Huadian Power generated 70.1 billion kilowatt-hours of electricity in the first quarter, up 24.55 percent, with losses reaching 813 million yuan.
"The more electricity your firm generates, the bigger the losses it will post," said Zhang Wenjian, deputy director of marketing and sales department at Guodian. Guodian generated 74.2 billion kilowatt-hours of electricity in the first quarter, up 27.9 percent.
The price of coal for power generation has risen by about 10 percent this year, which has added about 30 billion yuan to domestic power companies' costs, according to the SERC.
This year promises to be a tough time for power companies as they said at the meeting that they recently received a notice that coal prices will be raised by another 50 to 70 yuan a ton.
The plight of power companies also makes it hard for them to get loans from banks to facilitate their capital flow, the power firms complained.
"At the end of this year, the country will not be free from major power shortages unless the government raises power tariffs in line with coal prices or offers other types of help," said An Jun, an official with Zhejiang Energy Investment Corporation.
"An increase in power prices will have a chain effect across all industries, and the government will take into consideration both power generation companies and end users, especially now, with the consumer price index (CPI) at such a high level," SERC vice-chairman Wang Yeping said earlier.
The government will not raise power tariffs until inflation is brought under control, Xu Zhimin, director of the National Development and Research Commission's economic operations department, confirmed earlier.
In addition to raising power tariffs, power firms also expected the government to subsidize coal-fired power plants, the paper reported without releasing the regulator's response.
"Subsidizing power companies is one possible option, but we are still considering and discussing suggestions from all sides," Xu said earlier.
China's CPI growth hit a 12-year peak of 8.7 percent in February and dipped only slightly to 8.3 percent in March.
(Chinadaily.com.cn May 8, 2008)
