Companies short of electricity and feeling powerless

By Wang Zhenghua (China Daily)
Updated: 2011-05-10 14:11
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CIXI, Zhejiang - The timing could not be worse. Companies are trying to flex their muscles in an economy that has grown at breakneck speed since the global economic meltdown, and there's not enough electricity to power the work. In Cixi, the deficit is about 200,000 kilowatts.

"The frequent power crunch deals a fatal blow to small and medium-sized enterprises, which account for the majority of businesses here," said Lou Yuanfang, vice-chairman of the local business association. It also hits companies that consume high amounts of electricity the hardest.

With normal production interrupted, companies might lose their motives for development, and employees lose income, he said.

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Huo Yunjun, general manager of the medium-sized Ningbo Tongren Bearing Co, said he felt strongly about the predicament that many small companies in Cixi experience - a new challenge on top of the rising cost of raw materials and labor shortages that have hit many companies since last year.

When his company is cut off from power, only 40 percent of the equipment can run using power provided by a diesel generator his company purchased, Huo said.

"The power generated with diesel has an unstable voltage and can only be used in elementary production rather than high-precision processing," he said. Diesel is more expensive, too, about twice the cost of electricity provided by the State Grid.

Many entrepreneurs have had to put expansion plans on hold. Huo said he acquired 10,000 square meters of land adjacent to his office building, "but we have to think twice about our expansion plan when a steady power supply cannot be guaranteed".

Most companies have found there is not much they can do, said Xu Songchun, secretary-general of the chamber of commerce in Cixi's industrial zone.

He mentioned a local mechanical firm that spent about 10 million yuan ($1.5 million) two years ago on automation equipment but cannot take full advantage of it because of the unexpected power shortage in a low-energy-consuming season.

Chemical fiber businesses in Cixi are having an even tougher time, Xu said. "The raw materials along the production line become waste when the power is off, generating a loss of tens of thousands of yuan."

Officials at the local power station in Cixi said they recognize the hardships and are doing their best to lessen the impact of the power shortage on businesses.