China, the world's biggest coal producer and consumer, plans to spend about 40 billion yuan (US$5 billion) by 2020 exploring for coal reserves across the nation, a top energy official said.

The country aims to secure about 170 billion tons of coal reserves, Xu Dingming, head of the energy bureau under the National Development and Reform Commission (NDRC), said.

"The budget will be used between 2003 and 2020 to boost the nation's coal resources," said Xu, but he declined to disclose how much the country has spent up to now.

The move reflects the nation's vigorous efforts to secure sufficient energy resources in fuelling its fast growing economy, which grew by 10.3 percent in the first quarter.

China so far has commercially recoverable coal reserves of 288 billion tons, with total estimated coal resources of 5.5 trillion tons, according to Zhang Yuzhuo, vice-president of China's biggest coal firm Shenhua Group.

"Companies are reluctant to invest in exploration due to its high risks, so we (the government) should step up efforts to look for more resources," said Xu.

The country last year yielded 2.19 billion tons of coal, with an annual increase of 24 percent in coal production over the past five years, Xu said in a report.

Huang Teng, a senior coal analyst who previously worked at the country's second-largest coal producer China Coal, said that it would not be difficult to find coal resources of that scale in China.

"We could find more coal in the western regions such as Xinjiang, Shaanxi, Gangsu, Qinghai and even Tibet," said Huang.

Huang suggested the country establish an industry fund to help companies find more coal resources in the country.

A senior analyst with a state-owned bank disclosed that the country is drafting regulations to introduce industry funds in China to finance big projects relating to energy.

One such fund for industry investments based in north China's Tianjin Municipality has already got government approval, with another in Shanxi Province still in the pipeline, according to the source.

In a bid to meet surging demand, the country is also highly committed to alternative sources such as hydro, wind and natural gas, said Xu.

Despite widespread criticism of building dams to generate electricity along rivers, Xu remained firm that hydro power will be a major energy source to meet China's increasing demand.

The country plans to build hydro power facilities with a total capacity of about 246 GW (gigawatts) by 2020, about half the nation's total installed capacity last year, Zhang Guobao, vice-minister of the NDRC, said earlier.

"About 70 percent of hydro resources in the west haven't been utilized, and we should try to fill the gap," Xu said.

When asked whether the government has stalled on a massive plan to import LNG (liquefied natural gas) as global crude prices soar, Xu said China is still pushing the LNG imports in "an orderly arrangement."

Zhai Guangming, a senior expert with the nation's biggest oil producer PetroChina, said last month that China would be able to produce 150 billion cubic meters (bcm) of natural gas by 2020, and imports could reach as much as 90 bcm, almost half of which is expected to come from LNG sources.

As for wind power, Xu said the country is expected to have on-grid wind power facilities of 2,000 MW (megawatts) by the end of this year, up from last year's 1,260 MW.

(China Daily June 20, 2006)