From: Reuters
Published January 28, 2008 04:58 AM

China's cleaner power firms feel unfairly squeezed

BEIJING (Reuters) - Some of China's cleaner but small energy producers said on Monday Beijing does not recognize their efficiency, and with profits squeezed between rising coal costs and falling tariffs they had been forced to halt operations.

Jiang Zhangshui, chairman of Zhejiang Tianma Heat and Power Co Ltd, said the on-grid tariff for their electricity was cut by some 10 percent since mid-December, as they are improperly classified as small coal-fired generators.

China is in the grip of its worst power supply crisis in years, and is imposing a series of emergency measures including a tentative ban on coal exports and ordering railway operators to speed deliveries of coal.

At the same time, it aims to phase out smaller plants to boost energy efficiency and cut pollution. Some of its policies include limits on grid access and cuts in tariffs for the targeted plants.

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But Jiang said the high-tech combined plants were unfairly targeted by a government that should be encouraging them.

"We are actually more efficient than big coal-fired generators as the heat produced in generation is properly used, instead of being wasted," Jiang told a press briefing in Beijing.

Around 45 percent of the firm's output is power while 55 percent is heat, which feeds mostly industrial users in southeastern Zhejiang province, he added.

Others in the industry had similar gripes.

"Our coal costs surged to over 800 yuan per metric ton from under 700 yuan in December, far above those for big power plants in Zhejiang which enjoy preferential treatment from the state," said Yu Weimin, chairman of Hangzhou Heat and Power Group.

"We learned that the Qinghuadao port will stop coal shipping for small power plants from next week," he added.

(Reporting by Jim Bai)

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