Major power shortage foreseen in China

BEIJING, July 17 (UPI) -- A major power shortage reportedly looms in China, brought on by rising coal prices and low government-controlled electricity rates.

Insufficient government-subsidized rates are especially hurting smaller power plants, which may be forced to shut down without higher rates, the Financial Times reported Wednesday.

The British business newspaper said nearly half of Chinese provinces, facing a critical coal shortage, are rationing electricity at the height of summer. Coal-based generation accounts for 80 percent of China's total power generation, the Times reported.

China, like many other Asian countries, is feeling the pinch of subsidizing fuel and power prices in the face of soaring world oil prices.

The shortage comes even as China battles the twin problems of rising inflation and the threat of the economy over-heating.

Inflation, currently at more than 7 percent, is seen as being fueled partly by the government's price controls.

The report said the government in June raised fixed electricity rates by 5 percent. But they are still 30 percent lower than called for by current coal prices, which have doubled since the start of this year even as power demand has doubled in five years.