China says to deploy more coal trains to ease power crunch

Reuters News
Posted: Jun 04, 2011 4:18 AM

BEIJING (Reuters) - China's Railway Ministry is ready to deploy more trains to transport coal around the country to help ease a power crunch which is expected to worsen as the hot summer approaches, state media said on Saturday.

"Relevant local bureaus are paying close attention to the supply and consumption of thermal coal in regions suffering power shortages, and will make sure no power shortage is caused by delays in railway transport," Xinhua news agency cited a ministry statement as saying.

More than 70 percent of China's electricity is generated from coal which is mostly extracted in northern China.

"The ministry often finds itself short-handed when demand for thermal coal surges in summer," Xinhua reported.

China's electricity demand is running so far ahead of supply that it is expected to be short of 30-40 gigawatts of power capacity this summer, twice the deficit caused in Japan by the earthquake and tsunami on March 11.

China has created the shortage by foisting low prices on power companies, who have little incentive to produce electricity because of high coal costs, economists say.

China's overloaded rail and road networks struggle to deliver vast quantities of coal from major producing regions in the north to big electricity-consuming provinces such as Jiangsu, Zhejiang and Guangdong in the east and southeast, where local supplies are scarce.

(Reporting by Ben Blanchard; Editing by Robert Birsel)