[These guys have no long-term memory<g>.The current power shortage is caused the fear of oversupply 5 years ago. And now they fear again?]--"Fears of oversupply as power plants mushroom"
Pamela Pun
China is facing a rash of unauthorised power plant construction which could lead to an oversupply of electricity in a few years, official sources admit.
The power plant rush is in response to the mainland's recent chronic electricity shortages, but it could prove costly.
The official China Economic Times says the number of black market plants under construction could double the capacity of power generation projects approved by the National Development and Reform Commission, the country's economic planning body.
In one documented case, the city of Leshan in Sichuan province cannot produce enough coal to feed all its new power plants - and so has to import fuel from mines hundreds of kilometres away. ``What worries me is not that there are not enough power plants under construction,'' Zhang Guobao, vice-minister in charge of the NDRC, said. ``What worries me is that too many are being constructed, so in a few years there will likely be oversupply again.''
In the first two months of this year alone, the NDRC received applications for power plant construction projects with a total generation capacity of 250 million kilowatts - equal to two-thirds of the mainland's current total power generation capacity.
The total generation capacity of unapproved ``black'' projects is estimated to be double that of those approved by the NDRC, says China Economic Times, which is controlled by the Development and Research Centre of the State Council.
Quoting industry experts, the newspaper said there would be 20 per cent oversupply of electricity around 2009, which would inevitably reshape the industry with some loss-makers being taken over by others or going out of business.
Ye Rongsi, vice-president of the China Association of Power Enterprises, said power supply and demand in most regions will be able to meet demand in 2006 with the construction of the authorised projects.
The chairman of North United Power, Wu Ruosi, says plants located close to coal mines would have the competitive edge. Around 80 per cent of power plants on the mainland are fuelled by coal.
Oversupply will affect electricity prices, analysts said, especially as Beijing plans to let the market decide energy prices. However, the rising cost of power generation equipment could narrow profits. The price of a 300,000-kilowatt generation unit has risen by 30 per cent in recent years, and the price of a 600,000-kilowatt generation unit has increased by 40 per cent.
The country is expected to consume nearly 15 per cent more electricity this year than in 2003 - 2,165 billion kilowatt hours. Industry will gobble up nearly 75 per cent of this total, but the biggest year-on-year growth is expected to come from the service sector, using an extra 16.6 per cent.
Central government economists predict the mainland's economy's rapid growth will moderate in 2005, with next year's growth up to 0.7 percent slower, and growth in electricity consumption is expected to fall.
25 November 2004 / 02:16 AM
thestandard.com.hk |
