China’s power companies are hemorrhaging cash, losing $2.3 billion in the first half of the year compared to $1.4 billion in the same period last year.
Coal prices have increased around 80% since 2007, while electricity prices have been allowed to rise only 15%.
Power companies need permission to raise prices or they need a bailout. Roughly translated from China Business News:
It is noteworthy, the report stressed that the current high rate of thermal power enterprise liability, because of continued losses, weakened the power company solvency, the power plant financing, loans decreased or even exhausted credit, liquidity shortage, power production and procurement of coal funds have been difficult to guarantee, suggested that the relevant government departments to coordinate and actively raise funds through various channels to help ensure that power generation companies to have money to buy coal to ensure security of electricity supply summer peaks.
The State Power Grid had already planned to shut down some generators over the summer to save money, but this is worse than expected. Now Guanxi is suffering its worst power outage in 20 years, according to China Daily.
Similar problems have affected Chinese taxi drivers, who protested yesterday to demand permission to raise prices to compensate for higher energy costs.