Tariff rise cannot offset power producers' losses-Expert

It is reported that the rise in on grid power tariff, which was introduced recently, cannot fully offset domestic power producers' losses caused mainly by rising coal prices.

Ms Xue Jing director of the department of statistics and information under China Electricity Council said that "The hike can offset some CNY 40 per tonne in coal price rise. She said that however, coal prices have seen an increase of CNY 140 from January to August of this year, and the price will see a further rise."

Mr Xue said the move will shift losses from the balance sheets of power producers onto electricity distributors. She said that the government may not adjust the retail power price in the near future and it was increased recently in July.

Mr Zou Xuyuan an analyst with China Galaxy Securities said in a recent report, China may raise the on-grid power tariffs again in the first quarter of 2009.

The soaring coal prices have squeezed domestic power companies' profit margins substantially. In some regions, coal-fired power plants have to reduce production or close, as they cannot afford the rising fuel prices.

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