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National power needs require investors
By Fu Jing (China Daily)
Updated: 2004-04-01 22:49

Shutoffs and brownouts will again occur in some Chinese regions over the next two years as the nation continues to grapple with what to do with power shortages.

Vice-Minister of the National Development and Reform Commission Zhang Guobao said the country is taking various measures to ease the power crunch, while calling on private and foreign investors to put their money into generating projects.

He noted that overseas investment has been welcome since the beginning of the nation's reforms and opening-up and more and more domestic private enterprises have moved into the power industry.

China's demand for power has soared since June of 2002 and led to limits on electricity use in some.

"By the end of last year, 21 provincial areas faced power shortages," Zhang said.

But Cao Yushu, the commission's spokesman recently said shortages are likely to ease this year with the government busily putting up plants across the nation.

Cao's based those views on dozens of new generators with a capacity of up to 37 million kilowatts going into production by the end of this year.

Zhang Guobao attributed power shortages to fast economic development, promotion of people's living standards, and booming energy-consuming industries. The restructuring of rural and urban grids and climate factors also played a part.

Zhang also said government departments have taken various measures, including redistribution of power supplies among regions, adjustments of electricity consumption through price controls and more power plants.

In the first two months of this year, China's electricity generation jumped 22 per cent year to 385 million kilowatts, with power projects under way to produce 130 million kilowatts.

The minister's judgment was backed up by the National Federation of Electricity Enterprises. It cited newly increased electricity capacity figures of 35 million kilowatts, lower than Cao's prediction of 37 million kilowatts.

Meanwhile, the electricity demand will soar up to 2.11 trillion kilowatt-hours, increasing 12 per cent compared with 1.89 trillion kilowatt-hours during 2003.

"The shortage is likely to be lessened in 2005," the federation said in the recent report.

Zhang Guobao called for greater efforts to improve power production and distribution so as to meet power demands.

By the end of 2003, the government already had plans approved for 26 soon-to-be constructed power generators with a capacity of up to 11.37 million kilowatts. A total of 92 projects, reaching a capacity of 83.91 million kilowatts are outlined in a feasibility study.

Experts said the power shortage is forcing system reforms, mentioning conflicts between power plants and grid companies, as well as between coal factories and power plants.

Zhang Jianyu, a visiting scholar with Tsinghua University, said coal prices float according to market demand, but for a long time electricity pricing has been controlled by the government.

Last year, the surging coal price and the fixed electricity price caused great losses to many power plants. To solve the problem, the government increased the price of thermal power at the beginning of 2004.

"To construct more power generators does not nail down all the problems," said Zhang.

He said the government should have integrated solutions for price reforms.

"Otherwise, I'm afraid that power plants cannot work because of coal supply shortages caused by higher prices.

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