Deficit warning on coal prices

Source: Xinhua  |   2008-7-5  |     NEWSPAPER EDITION

POWER plants in China's eastern provinces will face an overall deficit if thermal coal prices rise another 60 yuan (US$8.75) per ton, said the East China Electricity Regulatory Bureau after surveying 64 local power plants.

The profit margin for coal-fired plants has been squeezed by rising thermal coal prices this year. For eastern power plants, the margin is only a bit higher than 0.01 yuan per kilowatt-hour, according to the latest report from ECERB.

These plants will start to lose money if thermal coal prices continue to surge, said the ECERB report.

An earlier report found that 80 percent of China's coal-fired power plants were in deficit in the first five months of this year with thermal coal prices rising by 60 yuan since the beginning of the year.

To protect profits, China's top economic planning organ, the National Development and Reform Commission, last month raised average electricity tariffs by 0.025 yuan per kw/hr.

The NDRC also imposed temporary controls on the factory prices of thermal coal.