Subsidies boosted to fight power shortage

PUBLISHED : Sunday, 26 March, 2006, 12:00am
UPDATED : Sunday, 26 March, 2006, 12:00am

Guangzhou's electricity supply shortages will continue in the first half of the year but the government will spend 200 million yuan to encourage small power plants to fill the gap, Mayor Zhang Guangning said.

Supply should improve in the second half, however, when more than 6 million kilowatts of new capacity in Guangdong is expected to come online, he said, claiming that next year, the city's power shortage would be over.

'Even though we are short in the first half [of this year], we have not felt it because of measures taken last year,' he said.

Peak demand last year was 1.35 million kilowatt-hours. Small producers were unwilling to step in because of the high fuel cost to run generators, so the government offered them subsidies to help them meet demand. Guangzhou can meet only a fifth of its electricity needs. The Southern power grid supplies the rest.

'Last year, we provided 200 million yuan in subsidies. This year, we have prepared another 200 million yuan to subsidise small producers in the first six months,' Mr Zhang said. He estimates the peak demand to be between 1.35 million kWh and 1.4 million kWh.

The distribution network was also inadequate to meet supply and needed to be upgraded.

'We have to increase investment in power distribution facilities. We spent 2.3 billion yuan last year and this year we will spend 3.8 billion yuan.'

As for fuel shortages, Mr Zhang said he did not foresee any problems as the central government would ensure supply.