China's top economic planning agency said Wednesday that it will
not raise electricity price in the near future despite lobbying
from state-owned power giants.
"We will continue to watch for a period of time before
considering raising electricity prices," Cao Changqing, head of the
pricing department of the National Development and Reform
Commission (NDRC), told a press conference in Beijing.
Cao said power price hikes last year and better corporate
governance of power firms have already reduced their cost and
increased profit.
He added coal prices were relatively stable this year and even
slightly lower than the beginning of the year.
Cao made the remarks in response to the media reports that
China's five major state-owned power groups including China Huaneng
Group and China Huadian Corp have appealed to the planner for power
price hikes in regions where the coal designated for power plants
had recorded the highest price rise.
The appeal aimed to compensate for higher cost as the prices of
coal for power companies jumped around nine percent over last year,
Wang Yonggan, secretary-general of the China Electricity Council,
was quoted as saying by the Beijing Times on
Wednesday.
Wang said the council had appealed twice this year to raise
electricity prices nationwide, but did not receive approval from
the NDRC.
In 2005 China introduced the policy of adjusting power prices
when coal prices change over five percent in a six-month period.
Coal-fired plants accounted for 78 percent of the nation's total
power generating capacity of 600 million kw in 2006, while the
clean hydropower accounted for only 20 percent.
"The prices of energy including electricity and oil were
relatively lower, but increases in their prices would not come
easily as we have to consider the possible impacts on various
sectors of the society," said Cao.
Zhou Fengqi, an analyst with the NDRC's energy research
institute, said, "The government has delayed energy price hikes
because it does not want to push up the already high
inflation."
China's consumer price index, the main gauge of inflation, rose
4.4 percent in June over the same month last year, the highest in
33 months and well above the government's target of three percent
for 2007.
Analysts also noted that price rises in electricity would help
curb the excessive growth of high polluting and energy-consuming
industries.
China's energy consumption to generate per unit of gross
domestic product fell 1.33 percent last year from the previous
year, but the power consumption per unit of GDP rose 2.75
percent.
Industrial output of the sectors, including power, steel, oil
refining, chemicals, construction materials and metals, which
consumed 70 percent of the nation's energy for industry, grew by
20.1 percent in the first six months, 3.6 percentage points higher
than the same period last year.
(China Daily July 26, 2007)
