Rising cost of coal may prompt more power cuts in China

China has started rationing electricity in an attempt to avoid an energy shortage in the country.

China is accustomed to power cuts: the country experiences them every summer as energy demand peaks. But the Government has warned that increases in coal prices and a decrease in hydropower output could make this year’s power cuts more severe.

The country’s state-owned power companies are losing profits as the price of coal goes up. The five biggest producers have reported losses of 10.57 billion Yuan (£995 million) since January 2011, according to the China Electricity Council.

The Government is now allowing coal-fired power plants to raise tariffs in some areas to prevent power cuts. Exporting diesel has also been banned to try to meet domestic demand.

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