Thermal coal, fuel used at power stations, is sufficient in supply but its price, quality and transport remain key uncertainties, Wang Yonggan, secretary-general of China Electricity Council (CEC), said Saturday.

For a long period of time thermal coal has been traded in China both at a market price and a set price, arranged by the government and much lower than the former.

Coal producers and power suppliers are grappling with the price as the country simultaneously tries to get rid of the set price while still limiting the electricity tariff.

At the annual ordering meeting in January, contracts signed only accounted for six percent of the overall volume and less than 20 percent were signed to date, according to figures released by the CEC.

China's coal demand will hit 2.25 billion tons in 2006 while overall supply will reach 2.26 billion, statistics of the National Development Reform Commission, the country's economic watchdog, showed.

However, to ensure profitability, neither side is showing any sign of compromise. Apart from the price fight, railway transport in central China and south China cannot afford more pressure. Meanwhile, North and northeast China face even more serious problems, Wang said.

Also, the coal supplied to power generators is now of lower quality, so power firms have had to buy more coal for each unit of electricity generated in comparison with previous years, Wang added.

Since generators put into production in 2006 will reach an installation capacity of 75 million kilowatts, power producers will face work hour cuts, which means they will not be able to afford more costly coal, he said.

Source: Xinhua