Chinese companies lose on thermal power

China Power Generation Losses narrowed to 6 billion yuan as wind and hydropower offset thermal power deficits; on-grid tariffs, coal costs, and NDRC pricing controls continue to pressure profitability, the China Electricity Council said.

China's five state-owned power generating groups lost more than 10 billion yuan US $1.5 billion on their thermal power operations in the first four months of the year, an industry official said, as the country braces for the worst summer power crunch in years.

With profitable wind and hydropower businesses included, overall power generation losses narrowed to 6 billion yuan, Xue Jing, director of the statistics and information department under the China Electricity Council, said on the sidelines of a conference in Beijing.

The council, representing major power generating and distributing companies, and monitoring trends like power consumption declines in 2008 across China, is overseen by the State Electricity Regulatory Commission.

The losses came after the five groups, parents of China Power International Development Ltd, Datang International Power Generation Co Ltd, Huadian Power International Corp Ltd and Huaneng Power International Inc, racked up more than 60 billion yuan in losses from thermal power as coal prices hit power giants across the sector over the past three years, putting pressure on the government to consider power tariff increases to encourage generation in coming months when demand rises.

The five groups own about half of total domestic power generating capacity, with one major power producer cutting spending to navigate losses.

The government was reported to have increased on-grid power tariffs in parts of the country last month, signaling another round of price increases nationwide, but industry officials and analysts said the rise was too small to restore profitability for many coal-fired power generators.

The National Development and Reform Commission, the price-setting agency, did not confirm the increase.

China has largely lifted price controls on coal, the energy source for more than 80 percent of its power generation, but tightly regulates on-grid and retail power prices, making it hard for generators to pass on rising coal costs to power users.

Related News

• Electricity Forum News

• Power Generation News