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Slower economy set to cool power demand and output

POWER demand and output in China will continue to fall this year because of slower economic growth, the State Electricity Regulatory Commission said yesterday.

Power stations will operate at reduced rates, the Beijing-based commission said in a statement posted on its Website. "Unsolved problems" in coal and power pricing will add to operational difficulties, it said.

Economic growth in China has slowed for five consecutive quarters and its 9-percent third-quarter expansion was the weakest in five years. Power consumption is declining as firms in industries from metals to toys cut output or close down after the global recession cut demand for exports, Bloomberg News said.

"Affected by the changes in the international and domestic economies, China's electricity market has made a significant shift from supply shortage to sluggish demand since October," the commission said. Power consumption fell 4 percent in October from a year earlier, the first decline since March 2005, and 9.6 percent in November, according to state data. The government has yet to release last month's figures.

"The changes in market conditions have brought about new challenges to ensure the industry's stability," the commission said in the statement.

Shares of China's biggest electricity producers, Huaneng Power International Inc and Datang International Power Generation Co fell in Hong Kong. Huaneng, the largest producer, shed 3 percent to HK$4.93 (64 US cents) while Datang International fell 6 percent to HK$3.61.

The country may face an energy oversupply within the next two years as the global crisis slows the economy, Wang Siqiang, a deputy director at the National Energy Administration, said last month.

China Southern Power Grid Co, which transmits electricity in the five southern provincial areas, said power demand in the region may "recover gradually" in the second half, helped by the government's economic stimulus plan. Electricity demand growth will stay at a relatively low level this year, Southern Grid, the smaller of China's two power distributors, said on its Website yesterday.


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