Halt of preferential electricity price to affect China's energy-thirst listed co

Halt of preferential electricity price to affect China's energy-thirst listed companies

BEIJING, March 20 (Xinhua) ? High energy-consuming Chinese companies listed on the Shanghai and Shenzhen bourses are expected to feel pains from the Chinese government's move to scrap preferential electricity price policies implemented by local governments.

The National Development and Reform Commission (NDRC), the top planner, recently requested local governments to stop applying preferential electricity prices to high energy-consuming industries because such actions run against the country's goal in adjusting industrial structure and promoting technological upgrading.

Since end-2008, some provinces in the central and western parts of China have trimmed their local electricity prices for high energy-consuming companies in a bid to shore up local economy.

Yunnan, in Southwest China, for example, lowered the electricity price for industrial use by 0.06 yuan per kwh from the high-water season for the period from December 1, 2008 to March 31, 2009, benefiting a number of local listed companies, which are mostly big energy users.

The removal of preferential electricity price will make it more challenging for high energy-consuming businesses to achieve profits, analysts say.

However, 15 electrolytic aluminum companies will be spared from the pressure due to a pending pilot proposed by State Electricity Regulatory Commission (SERC), which allows power users and generators to directly negotiate on the electricity price.

Given oversupply in power industry, power users can bargain for lower-than-average prices.

Yunnan Aluminum Co. Ltd. (000807.SZ), Shanxi Guanlu Co. Ltd. (000831.SZ) and some subsidiaries of Aluminum Corporation of China Limited (Chalco) have been covered in the 15 companies for the pending trial run of direct power purchase.

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