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Unbalanced demand supply relationship causes power shortage

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2011-05-20 17:27
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Unbalanced supply and demand is causing an electricity crunch in China, said Shu Yinbiao, deputy general manager of the State Grid Corporation of China (SGCC).

Shu made his comment at the 14th China Beijing International High-tech Export on Thursday, Beijing Times reported Friday.

As a corporation owning 2 trillion yuan ($307.50 billion) in assets, Shu said SGCC's 40 billion yuan in profit is not high when compared to other Chinese State-owned enterprises and other businesses around the world, Shu said. He was responding to ideas that the high profits from China's national grid deters thermal power companies from generating power. Some people felt that led to power shortages in many places across China.

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Shu said the root of the power shortages is the unbalanced supply-demand relationship rather than the national grid's profitability threatening other power companies' earnings.

SGCC will expand construction of the national grid to increase electricity supply in order to reduce power shortages, Shu told the newspaper.

He said on-grid power prices have been raised in some provinces to improve local power companies' profit margins, but the consumer prices for electricity will remain unchanged. The increased costs will be swallowed by the national grid and affect its profits, he explained.

But the consumer power prices will be adjusted at the right time, he said.

According to data from the National Bureau of Statistics, in the first 11 months of 2010, China's grid brought in 2.19 trillion yuan in revenue, accounting for 65 percent of the power industry. Its total profit stands at 59.2 billion yuan, which is up 1,828 percent from a year earlier and accounts for 42 percent of the industry.