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Coal Pricing Dispute Slows Contracting
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Disagreements over coal prices between coal producers and power generators are still going on, and more than 80 percent of China's power-coal contracts have not yet been secured for this year.


So far, power producers in China have been able to secure less than 20 percent of this year's coal contracts, said Yang Linjun, general engineer with Zhongneng Power Industry Fuel Co, which helps arrange coal supplies for the nation's top five electricity producers such as Huaneng and Datang.


"These finished contracts, totalling 110 million tons of coal, were inked at the same price as in the fourth quarter of last year," Yang yesterday told China Daily.


The unparalleled pricing mechanisms of the market-based coal and government-controlled electricity are at the source of coal price disputes between the coal power sectors.


At the annual coal-ordering conference hosted to secure coal supplies for electricity generators at the beginning of last month, only 6 percent of the coal supply contracts required by the country's power generators were finalized, said Wang Yonggan, secretary-general of the industry association of China's electricity producers.


Almost two months later, the country's top five power producers still haven't reached agreements with the giant coal firms like Shenhua and China Coal for the bulk of their coal supplies, said Yang.


"Most of the 20-per-cent contracts were signed between the small power generators and the small coal producers in the local areas," Yang said yesterday.


Most coal producers are demanding at least 20 yuan (US$2.5) more for a ton of coal contracted to power firms, Yang said.


In order to settle the dispute between coal and power, three ministerial-level government bodies including the National Development and Reform Commission (NDRC), Ministry of Communications and Ministry of Railways, earlier this month announced power-coal contracts must be finished by the end of this month.


(China Daily February 21, 2006)

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