Guangzhou pays price for power shortages

PUBLISHED : Friday, 15 April, 2005, 12:00am
UPDATED : Friday, 15 April, 2005, 12:00am

Inadequate first-quarter supply costs industries 10 billion yuan in lost output

A shortage of power cost Guangzhou 10 billion yuan in lost industrial production in the first quarter, bringing the city's gross domestic product 2.6 percentage points short of its target.

GDP grew 9.4 per cent in the quarter, below the 12 per cent targeted, and was down from 14.91 per cent in the same period last year, state media quoted Vice-Mayor Lin Yuanhe as saying.

Acute power and land shortages, rising prices of raw materials and a build-up in inventories were holding back Guangzhou's economic development, officials were quoted as saying.

Guangzhou Economic and Trade Commission director Ping Xinguang said small power plants would be encouraged to produce electricity during peak periods and 20 to 30 per cent of supplies would be diverted from commercial consumers to ease shortages in the industrial sector, which required 1.5 million kW daily.

Subsidies would also be given to small power producers with capacities of less than 50,000kW, he said.

The small producers have been vulnerable to rising fuel prices because they get poor rates when they sell to the power grid.

The Guangzhou Development and Reform Commission said the power shortage was already affecting industrial growth and had caused a 10 billion yuan drop in production, based on figures from the Guangzhou Economic and Technological Development District.

The development district, which accounts for 40 per cent of Guangzhou's industrial production, estimated the power shortage cost 4 billion yuan in lost production.

April is the beginning of the peak manufacturing season, which lasts until August, and officials predict factories will have to stop work four days a week in August to balance power supply and demand.

A manager at a Hong Kong-based packaging company with its factory in Guangzhou said that power supply to the factory was already cut three days a week from 8am to 10pm from mid-March.

'We run 24-hour operations so we are losing more than one-third of our output,' the manager said, adding that he expected profits to plunge 10 to 20 per cent if the situation did not change between April and September.

'It wasn't so bad last year. We had power blackouts only one day a week and [the government] tried to help us as much as they could but the situation is grave now.'

The company is trying to buy its own generator because it fears the situation might deteriorate leaving it with no power five days a week.

But given the capacity of generator it requires - 1,200kW - it may not be able to find one quickly.

The situation has worsened from last year when Guangzhou's GDP grew by 15 per cent.