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China hikes industrial electricity costs

06-01-2011 08:52 BJT

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China has raised electricity prices in 14 provinces and Chongqing municipality to ease power shortages. Industrial, commercial and agricultural industries will be affected. But prices for residential use will remain unchanged.

The National Development and Reform Commission says the hike on electricity prices for 14 provinces and Chongqing municipality will take effect on Wednesday. The average price rise is 16.7 yuan per thousand kilowatt-hours.

Shanxi, the country's leading coal producing region, saw the largest price increase, while southwestern Guizhou Province saw the least.

The NDRC says the move is aimed at easing regional power shortages, restrain the development of high-energy industries and ensure a steady supply of electricity for residential use.

The commission says the rise will have a limited impact on the country's consumer price index, a main gauge of inflation.

"I think the impact will be limited, as electricity prices for residential use remain unchanged. According to our calculations, the price hike may indirectly push CPI up by 0.05 percent," said Liu Shujie, director of Economic Research Insitute, DNRC.

China has raised electricity prices in 14 provinces and Chongqing municipality to ease power shortages.

The NDRC says fast-increasing power demand caused a electricity shortage this year. The price adjustment could curb demand from high energy-consuming industries. Another factor is the severe drought in the country's southern areas, where hydropower takes up a large proportion. Meanwhile, rising coal prices have pushed up electricity producers' costs.

Liu said, "Coal prices have been rising for a long time, with large increases. But prices of thermal power have not risen accordingly."

Electricity producers in China have recently faced heavy losses, as coal prices are set by the market, while the government sets electricity prices.

Editor:Shi Jierui |Source: CNTV.CN

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