Do More With Reuters
Partner Services

UPDATE 1-Guangdong extends power subsidy to ease shortage

Mon Jul 7, 2008 2:02pm IST
 
Email | Print | | Single Page
[-] Text [+]

(Adds trade comment on fuel oil import, power shortage)

BEIJING, July 7 (Reuters) - Guangdong, China's manufacturing hub, has further raised subsidies to small oil-fired power plants and extended them to May and June to help avert summer shortages, one oil trading source said on Monday.

Local authorities have allowed some 30 small oil-fired plants in the province to charge 1.14 yuan ($0.17) for each kilowatt hour (KWH) of electricity generated for May and June, said the source with direct knowledge of the subsidy.

"The increase this time (for May and June) is another 0.08 yuan," said the source from Guangzhou, capital of Guangdong. The previous tariff was 1.06 yuan per KWH.

Guangdong, one of the Chinese regions facing a serious power crunch this summer, started subsidising generators last January by allowing them to charge higher-than-normal on-grid tariffs to cope with the soaring cost of fuel oil.

Power plants have complained that the government subsidy has come too slow and is still too small to make up for the heady growth of fuel oil prices, and have for months been forced to slash imported fuel oil in favour of relatively cheaper domestic substitutes.

Fuel oil traders said the new subsidies would hardly provide a cushion to the power plants with a price threshold of around $520-$530 a tonne, versus $760 for benchmark Singapore fuel oil prices FO180-SIN, which have risen 55 percent so far this year.

The subsidy would translate into about 400 yuan for each tonne of fuel oil prices, which are now priced at 6,200-6,300 yuan per tonne, traders estimated.

"This works out to be about 6 percent or so off the current price FOB (free-on-board) basis in China. It's really not enough, and it isn't going to change anything," a Singapore-based trader said.  Continued...

Russian Finance Minister Alexey Kudrin poses with his G20 colleagues and central bank leaders during the family photo at the G20 Finance Ministers meeting at a hotel in St. Andrews, Scotland. REUTERS/POOL New
Pledge to support economies

G20 financial leaders pledged to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured.  Full Article | Related Story 

Market Update

  • IndiaIndia
  • USUS
  • UKUK
  • Asia
  • Most Actives

SHOWCASE

Sanjay Sinha
Balancing Act

In India, it is a tough choice between growth, managing inflation and financial stability.  Full Article 

 
Nipun Mehta
Road to Recovery

There needs to be an acceptable balance created between education and healthcare and infrastructure spend, says Nipun Mehta of SG Private Banking.   Full Article 

 
Robot Asimo

Snapshots of Honda Motor's humanoid robot Asimo  Slideshow 

 
Marketing Strategy
Marketing Strategy

Companies are now using direct marketing methods to sell their products.  Full Article 

 
Exit Plans
Exit Plans

Factbox - Stimulus exit plans for Asia-Pacific's big 5 economies  Full Article