Business

China’s electricity producers asked the government to provide subsidies in the second half of this year to meet losses incurred by higher fuel costs and ease the country’s sixth year of power shortages.

“When electricity tariffs are not high enough to cover power companies’ cost, the government should start granting subsidies in the form of rebates from value-added taxes and an increase in cash loans,” the China Electricity Council has said in a report on its Website.

Four of the country’s biggest power companies, including China Datang Corp and China Guodian Corp, may have posted combined losses of about 7 billion yuan (US$1 billion) in the first half, the Shanghai Securities News reported last month. Power shortages have forced the country to ration supplies in Shandong, Hubei, Shanxi, Henan and Liaoning provinces, Bloomberg News said.

Power supply will be “generally balanced” in the second half of this year, with some provinces having “slight shortages,” the group said in a report last week. The shortage may reach 15,000 megawatts in the second half, it said. The government should expedite power-pricing reforms to help power producers cover losses, it said.

Power plants may need 1.6 billion tons of coal this year, a rise of 11.5 percent from 2007. Power demand may rise 11 percent this year.

(Shanghai Daily August 12, 2008)