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Snow crisis triggers reconstruction boom
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Power equipment makers like Far East may benefit the most from the tens of billions of dollars planned to rebuild and upgrade the power grid damaged by the snowstorms. The heavy snow hit more than 36,000 power lines and nearly 2,000 electric substations, causing a direct loss of 18 billion yuan, according to the State Electricity Regulatory Commission.

"The massive repair work will boost equipment makers," says Wang Peng, an analyst from China Merchants Securities Co Ltd.

State Grid, the bigger of China's two power transmission companies, has earmarked 39 billion yuan to renovate and rebuild the transmission infrastructure damaged in the snow.

Four out of 26 provinces in the State Grid's network were hit the hardest. The worst hit were in Hunan and Jiangxi provinces. The company says its direct losses amounted to 10.5 billion yuan by February 20.

The snow disaster has also raised the question if the country needs to upgrade the design standards of its power grids in the affected areas. The National Development and Reform Commission says it is looking into the issue.

"If higher standards are employed, it will substantially balloon the nation's already grand investment budget for the power grid system," says Wang.

High-voltage power lines in China are designed to withstand about 10-15 mm of ice. But during the recent snowstorms, the average was twice that, and up to 60 mm in some places. Grid operators would have to triple the building costs to enable the lines bear up to 30 mm of ice, a source from the State Grid says.

Grid operators have already been investing heavily over that past few years to enable the power transmission network support the booming economy. For example, State Grid planned to invest 253.2 billion yuan to improve its transmission network last year, up almost 40 percent from 2006. Another 300 billion yuan will be spent in 2008 and 2010 each on power grids.

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