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Guangdong Swaps out Oil for Coal to Cut Costs
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The China Electricity Council yesterday called for small oil-fired power plants in South China's Guangdong Province to be replaced with bigger coal-fired plants.


The council, which brings together the nation's major electricity firms, made the suggestion in a bid to reduce the country's heavy reliance on high-priced oil,


Plants with 10 GW (gigawatts) in capacity will be replaced in the province, while nationwide small coal-fired electricity generators involving a total capacity of 14 GW will be closed by 2010, in order to enhance efficiency, Wang Yonggan, secretary-general of the council, told a meeting on gas power development yesterday.


"China's electricity industry needs to maintain a steady growth, and small, inefficient coal- and oil-fuelled power generation units should be phased out to improve the structure of electricity generation sources," Wang said.


Three coal power plants have been set up in the energy-guzzling Guangdong Province as substitutes of generation facilities driven by oil, Wang told China Daily on the sidelines of the summit.


Oil-fuelled power plants make up much of power generation facilities in Guangdong, but soaring oil prices have put them in the red.


The central government wants to use China's abundant coal resources to replace oil, of which about 40 percent is imported.


The nation's top economic policy planner, the National Development and Reform Commission, on Sunday increased the retailing prices of gasoline and diesel by 3 to 5 percent in China to narrow the gap with global levels.


A Xiamen-based fuel oil trader in East China's Fujian Province, earlier told China Daily his diesel oil business turned sluggish in the wake of the oil increase, as his buyers, most of which are coal-fired power plants couldn't afford the high price.


Wang said coal for the Guangdong power plants would be transported by rail or shipped in from the coal-rich northern areas.


Meanwhile gas shortage in China, a problem stemming from the high prices that have delayed the country's overseas purchase of the cleaner fuel, has left many gas-fuelled power plants idle in the south and east.


By the end of this year, gas power plants in the eastern region with a capacity of 6 GW will stay unused as a result of gas supply shortfalls, Wang yesterday said.


"If further gas supply sources could not be secured, the government should not approve any gas power generation plant in the next five years," he said.


Wang yesterday also said that coal producers had not inked final contracts with power firms for this year's coal supplies, mainly due to "price disputes."


Coal companies are demanding a premium of 15 to 40 yuan (US$1.8 to 4.9) a ton, much more than power generators could afford, he said.


(China Daily March 30, 2006)


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