China's power shortage situation will be fundamentally altered by 2006, Vice Minister Zhang Guobao in charge of the State Development and Reform Commission told Xinhua in a recent interview.

The power shortage problem has become very severe, but the country has taken various measures to ease the pressure, Zhang said.

Since June 2002 China's demand for power supplies soared, which led to the limitation of electricity use in many areas due to power shortages.

"By the end of last year, 21 provincial areas had faced power shortages, and the problem will be worse this year," Zhang said, attributing power shortages to fast economic development, promotion of people's living standards, the booming of energy-consuming industries, restructure of rural and urban grids as well as climate factors.

Governmental departments have taken various measures, including redistribution of power supplies among different regions, adjusting electricity consumption through price controls and establishment of more power plants, he said.

In the first two months this year, China's capacity for electricity generation jumped 22 percent year on year to 385 million kilowatts, and currently power projects with a capacity of130 million kilowatts are under construction, he said.

China does not forbid domestic private funding or foreign investment in power projects, he said, noting overseas investment has been welcomed since the beginning of reform and opening-up and now many domestic private enterprises have invested in power plants.

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

China's coal price floats according to market demand, but for along 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.

(Xinhua News Agency April 1, 2004)