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SINGAPORE

Guangdong Short of Power as Oil Prices Soar

June 17, 2000

POWER shortages are plaguing south China's booming Guangdong province as soaring oil prices have prevented power plants from boosting output to satisfy rising consumption, local industry sources said yesterday.

Blackouts paralysed parts of the province for several hours a day for nearly two weeks during the last month after heavy demand overburdened the power distribution network, the sources said.

"Power use was much higher this year due to hotter weather and higher manufacturing output . . . The sky-high oil prices are making things worse," said an official with a major power plant.

Guangdong, one of China's top power users consuming approximately 8,300 megawatts of electricity, generates nearly 60 per cent of its power from oil-fired and coal-fired plants, with the rest supplied by hydro and nuclear plants.

Guangdong imports up to one million tonnes of fuel oil each month during the peak seasons, and is expected to consume 15 per cent more electricity this year than in 1999.

The province, China's top fuel oil consumer and main import point, was paying 2,100 yuan (S$434) per tonne this week for imported fuel oil, a record high matching levels in mid-March.

Sources said plants fuelled by non-oil energy sources were running near maximum capacity, while oil-fired plants were hit by the high cost of fuel oil, most of which was imported.

Fuel oil-fired power plants, mostly of scale below 50,000 kW, have either been shut down or have been running under capacity since March, as surging imported fuel oil prices have begun to generate losses.

"Some plants would lose as much as 0.20 yuan per kilowatt-hour (kwh) at current oil prices, a tremendous loss to a small-capacity generator," said a fuel oil trader based in Guangdong.

The peak consumption period from July to September, when air conditioning-related demand surges, is a concern.

"If oil prices fail to come down, the government may have to resort to subsidising plants into higher operations or buy more power from neighbouring provinces," said the power plant official. Local governments were considering a subsidy of 0.026 yuan for generation of one kwh, sources said. -- Reuters http://business-times.asia1.com.sg/6/news/nchin03.html

-- (Dee360Degree@aol.com), June 19, 2000