Coal shortage at China plants
Chinese power plants are running out of coal, with less than a three-day supply in some areas, the government said Tuesday, adding to China’s logistical headaches following a devastating earthquake.
It is the second time in three months that Chinese power plants have run short of coal, an unintended effect of government-mandated price controls — a throwback to communist central planning — to shield the public from rising global energy costs.
Some 32 power plants have already shut down due to lack of fuel, the State Electricity Regulatory Commission said in a report. It said two were in Sichuan province, where last week’s magnitude 7.9 quake damaged the power supply grid.
In February, freak snowstorms caught power plants without adequate coal supplies, causing blackouts and factory shutdowns in a country that relies on coal for 70% of its electricity.
Utility companies have let coal stocks dwindle and are buying less fuel after Beijing froze power prices last year, while allowing the market-set costs that producers pay to rise.
The SERC gave no indication as to how Beijing might respond to new shortages. An employee who answered the phone in its press office referred questions to the Cabinet’s National Development and Reform Commission. The NDRC did not respond to requests for comment.
The government created an agency this year to oversee energy policy, but it has yet to take any action.
Beijing has also frozen retail prices of gasoline and diesel. That helped farmers and the urban poor, but it has spurred sales of gas-guzzling luxury cars and propelled double-digit annual growth in fuel consumption.
Oil refiners say they are suffering heavy losses and some began cutting production last year, causing fuel shortages in parts of China’s south.
Power plants in the eastern province of Anhui have less than a three-day supply of coal, while those in Beijing have about a week supply, the electricity agency said. The recommended minimum is 15 days; a seven-day supply is considered dangerously low.
In Sichuan province, where the May 12 quake killed tens of thousands of people, power plants have only a seven-day supply of coal, according to the agency advance america cash advance. It said two plants have none.
The quake’s effect on coal supply was not addressed in the report, but the NDRC says 200 coal mines in Sichuan were closed for inspection after the disaster.
China’s power use is growing at double-digit annual rates, driven by a boom that saw the economy expand by 10.6% in the first quarter of this year.
On Tuesday, a U.S. official urged Beijing to join the International Energy Agency — a group of major oil consumers that includes the United States and European governments — and aid its efforts to keep petroleum markets stable in times of crisis.
"I believe it is important for China and other key economies in the world, such as India, to prepare to eventually join the IEA as full members," Daniel S. Sullivan, an assistant U.S. secretary of state, said at a business conference.
China’s surging energy demand, and its potential impact on prices, has stirred unease abroad as state companies scour Africa, Central Asia and elsewhere for more.
The 27-nation IEA coordinates the release of petroleum from national stockpiles to stabilize prices if crises threaten to disrupt supplies, Sullivan said. He said that was last done in 2005 after Hurricane Katrina in the United States.
Sullivan, who is the U.S. envoy to the Paris-based IEA, said Beijing was invited to take part in an emergency response exercise next month. He urged the government to accept.
The Chinese Foreign Ministry referred questions about whether Beijing might join the IEA to the NDRC, which did not immediately respond to requests for comment.