Government to Cut Prices to Allow Compensation to Coal Suppliers

Government to Cut Prices to Allow Compensation to Coal SuppliersThe national government is planning to cut down on the wholesale prices that distributors are paying for electricity coming from coal fired plants a move that experts says will allow the compensation to struggling coal suppliers. The National Development and Reform Commission are telling provinces to impose a cut at an average rate of .0093 yuan per kilowatt per hour. Some cuts started last Friday in which power companies might adopt different dates in implementation but retail prices will remain the same.

In September 2013, china has adjusted the on grid power tariffs cutting it by .025 yuan per kilowatt hour then used a coal tariff linkage system wherein tariffs were subjected to change when coal prices fluctuates by 5 percent. The mechanism was introduced in 2004 but not followed. Experts are saying that the government might use the extra funds in compensating coal producers since they are barely making money as recent study showed that more than 70 percent of Chinese coal companies are now losing money and 50 percent of these companies are late in paying wages.

These tariffs cuts are small and will only have limited impact on these power companies as these cuts will remove more than 5 billion yuan of profit from the top five state owned power companies.

Comments are closed

The Contributor

Follow me on twitter: TriaSasin

    Connect with Jasmin:
  1. - Email: Click here

Have Your Say!

What is the BEST investment over the next 5 years?

View Results

Loading ... Loading ...

  1. Etienne Ducrot: Hi, I’m interested to contact this Foundation. Do you know how? Thanks. Etienne
  2. Emma: Hi Jasmin, I’ve read your article about a new medical center opens in Nanshan at the end of this month....
  3. sherry lee: A simple story with great words…I love it.
  4. Evangeline: Awesome piece!
  5. Glenda: Hi there, I enjoy reading through your article post. I wanted to write a little comment to support you.