Coal-rich Shanxi faces record power shortages

BEIJING, July 7 (Reuters) - Coal shortages have led to record power shortfalls in northern China's Shanxi province and the coal-rich region had to ration supplies and even import electricity from Beijing to reduce deficits, officials said on Monday.

"The nearly 5 gigawatts (GW) supply gap, or a third of power demand, was unprecedented and would likely get worse ahead due to coal problems," said Li Jianwei, vice president of the Shanxi Power Industry Association.

Around 3.5 GW, or over 15 percent of generating capacity in Shanxi had been shut down due to the lack of coal, according to reports on www.sxetc.gov.cn, a website run by the Shanxi Provincial Economic and Trade Commission.

Shanxi bought 1 GW of power from Beijing at a time in late June to make up for some of the local supply gap.

"Power imports will be no longer viable when the Olympics approaches," Li told Reuters.

Power demand in Beijing, normally a major electricity importer, is expected to surge to record highs this summer because of the sporting event.

Nearly half of coal supply to power generating companies in Shanxi comes from small mines, many of which have been closed due to safety reasons, although the central government has said to speed up restarting to increase supply.

Li said many generators were still making a loss even after the recent on-grid power tariff hike, which had also curbed their willingness to rev up operations.

China raised retail electricity prices for industrial and commercial users by 0.025 yuan per kilowatt hour (kwh), or 4.7 percent, and on-grid rates for coal-fired power generators by around 0.02 yuan/kwh, effective July 1.

(Reporting by Jim Bai; Editing by Anne Marie Roantree)