BEIJING - China's
investment in the power and heat production and
supply sectors was 289 billion yuan (US$36
billion) in the first half of this year, up 16.3%
year on year, but the growth is much slower than
the average growth for the power industry as a
whole, reports the National Bureau of Statistics
(NBS).
By comparison, investment in the
power and heat production and supply sectors in
the first half of 2005 was 248.5 billion yuan, up
37.4% year on year. This means that the growth in
investment for the first half of this year is 21
percentage points lower than in the same period of
2005.
The state's investment in the power
industry has been steadily rising in the past
three years: it was 100 billion yuan in 2004, grew
40% year-on-year to 140 billion yuan in 2005, and
the
investment may total 1.2
trillion yuan in the 2006-10 period, averaging 240
billion yuan annually, 70% more than in 2005.
But there are indications that while the
absolute amount of investment in the power and
heat industry is increasing, the growth of the
investment is slipping.
At the 2006
mid-year meeting of China Electricity Regulatory
Commission, chairman Cai Songyue said the power
supply and demand equation in China had changed
greatly, with the tight power-supply situation
easing and the growth of power output slipping.
China's power-output growth in the first half of
this year is 1.2 percentage points lower than in
the same period of 2005.
Cai also pointed
out that the areas experiencing brownouts has
decreased, and the period of time for brownouts
has been shortened.
Professor Liu Jipeng
at the Capital University of Economics and
Business thinks the situation was beginning to
return to normal as early as in 2003, and experts
have predicted that China's power supply and
demand will be basically balanced in 2006-07.
Given the improvement in the power supply
and demand in the first half of 2006 against a
backdrop of a more equitable balance between power
generation and demand, it is unlikely that China
will invest heavily in the power industry in the
next few years.
In June an official of the
National Development and Reform Commission (NDRC)
disclosed that progress has been made in sorting
out illegal power stations, with 42.8 million
kilowatts of capacity being officially endorsed,
46 million kilowatts being annexed into
construction plans for 2006 and 2007, and 34
million kilowatts being closed down.
Illegal power-station projects in some
areas have not been suspended or stopped by local
governments and enterprises in accordance with the
requirement, the official said.
The
official said construction of all power-station
projects in 2006 and 2007 will be arranged
according to the NDRC's plan. As for projects
after 2008, they will require further study
according to overall planning and actual
conditions of market development.
NDRC
information shows that power-equipment makers have
already been running over capacity. The contract
order books for power equipment could reach 141
million kilowatts for 2006, and may drop to 67
million kilowatts in 2007. If no effective
measures are adopted, Chinese power-equipment
makers may encounter big price swings.
According to the "Analysis of Operation of
Power Industry in 2005 and the Forecast for the
Trend in 2006" published by NDRC, 1,280 power
enterprises reported losses in 2005, amounting to
12.7 billion yuan. The rate of return on
investment in China's power sector is only 3.7% at
present, lower than the 5% investment return for
other industries.
However, structural
power shortages still exist.
Wenzhou city
in Zhejiang province had
6,236 power outages in the first four months of
this year. Nanjing and Xuzhou face similar
problems.
Power supply and demand are
basically balanced in Zhejiang province, said
Zhang Jianhua, vice director of Zhejiang
Provincial Power Company News Center, but the
province is still short of power in the summer,
and the peak-load power-supply gap sometimes
reaches 2 million kilowatts.
NDRC Vice
Minister Zhang Guobao points out that improvement
of the tight power situation does not necessarily
mean that power is oversupplied in China. It just
means an improvement over the tight supply
situation in the past.
