Monday, February 25, 2008

Inadequate Coal Supply to Affect Power Production in China

by Richard York

The worst in fifty years snowstorms in China is showing its effect on the economy of China which has already suffered loss of lives and agriculture produce. Although news had it that the limited Chinese coal supply in Asia had increased coal prices in the region, now the country itself is under serious trouble of power shortage, if one believes an official from the China Electricity Council. The state’s media announced today as per the official that if further steps are not taken by the government there can be a real power shortage for the current year in the country.

The shortage in coal supply and the rising cost of the thermal fuel has already taken its toll in the form of shutting over ten gigawatts of the power generating capability in the areas in which the China Southern Grid Corporation covers. The percentage figures of the shut down came at about 6% and this figure was for the month of January. The short coal supply has now created a power shortage of about 6 gigawatts and this figure is only of the region which the China Southern Grid Corporation covers. There was yet again another cold wave which hit the country disturbing transportation of coal in most of the regions of China. This short supply of coal led to hampering 40 gigawatts that is 6% of the nation’s overall power generating capability.

Eleven percent of the power generating capacity of the nation is also suffering from coal shortage and has coal stocks below their levels. According to the report by China Securities Journal the State Council’s immediate steps since late January this year to improve coal stores at the power plants resulted in some improvement, however the supply of coal is the main factor that affected power generation in the country. General Secretary of the electricity council, Wang Yonggan said that unless there is a mechanism which can sort out issues like coal volumes, transportation and its prices there can emerge a serious problem for the power industry of China.

However, the general secretary did not explain the measures which were needed for improving the looming power crisis in the country. In the year 2007 over 80% power of China was produced from generators which used coal as their fuel. Wang Yonggan also said that the new generators are also expected to function and hence there has been great demand in the supply of coal by the power plants and the demand shot by 107 million tones for the current year. Given the rising demand of coal there had to be improvement in the capacity of coal transport which has not happened and this lack of pace with the demand of coal is driving the issue towards a serious problem. The demand of coal from new generators located in the central region of China and in the eastern Shandong province has grown beyond the proportion which was recoded in the contract and this will leave these plants in short supply of coal all through the year.

 

 

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