It is reported that China’s ever rising coal prices and the stalled government controlled electricity price are putting pressure on power generators, and companies are losing money. The five biggest power producers have been urging an upgrading of the coal electricity linkage policy for some time. The National Development and Reform Commission is said to be studying the question but so far coal goes up while electricity prices remain the same.

While coal prices have been left to market determination, the price of electricity is under strict regulation. Naturally, coal prices have been rising these years. Since the 2002 marketization of coal, the price of coal used to generate electricity has increased from CNY 110 per ton in 2002 to nearly CNY 950 now and in some regions, the price has reached CNY 1000 per ton.

Taiyuan’s coal companies, affected by the price hike of raw materials and the shortage of supply, have increased their coke prices by CNY 100 to CNY 200 per ton. Many miners are now selling their first level coke at over CNY 2000 per ton.

Mr. Lu Qizhou general manager of China Power Investment Corporation said that the company’s price for coal increased CNY 35 per ton on average in 2007, and in some regions, the price increased CNY 65 per ton, resulting in a CNY 1.968 billion rise in annual production costs.

According to contracts with coal companies this year, the price of coal will rise another CNY 40.12 per ton, bringing an energy cost increase of more than CNY 4 billion. China Power Investment Corporation’s 2007 annual profit was CNY 4.5 billion.