By Zhang Xiangdong
Published: 2008-04-25

From News, page 5, issue no. 364, Apr. 21, 2008
Translated by Liu Peng
Original article: [Chinese]

Two months after snowstorms ravaged southern China, officials have said that 22% of the total direct economic damage - 40 billion yuan – was done to China's power infrastructure.

At a meeting held on April 18 between government authorities and power companies, the China Southern Power Grid and State Grid said that they needed as much as 25 and 39 billion yuan respectively to rebuild.

Regarding the costs of rebuilding, an official from China's power authority said: "It is unnecessary to rebuild the affected power grids to the highest standard, and the financial support for that isn't there anyway."

The official pointed out that rebuilding costs could have implications for rising power prices, and any such price increases would have to remain bearable by power customers.

Beside the rebuilding effort, flaws in the disaster response system became another focus of the meeting, as the storm exposed vast weaknesses in dealing with a severe crisis.

During the snowstorm, local small-scale power plants, especially those which had been previously slated to be shut-down, played an important role in supplying power. Some experts proposed that the government reconsider its crack-down policy against them.

Affected by the disaster, power companies' profits in the first two months were 93% lower the same period in previous year.

Exacerbating their costs was the rising price of coal used for power generation, which increased 25 yuan in 2007, bumping up costs for the five top power companies by 29.4 billion yuan. Due to tight supply, the price of coal would likely rise even more in 2008.

With this backdrop, one staff involved in electric power authority proposed to ask financial support from the central government. The proposal may cover exempting or delaying handing in the electric power companies' income tax or adjusting the assessment index of Central-owned companies' business achievements.

Meanwhile, some experts and companies' executives suggested that the price of electricity fluctuate with that of coal as soon as possible. However, the authority expressed that given high inflation pressures, this policy would be paused for the time being.