At a press conference on January 28, Zhu further explained that there are not enough large power plants. Under such circumstances, the authorities should attach greater importance to management and concentrate useful resources to key and pillar power plants. When the coal supply was tight, the state had to adopt corresponding emergency measures, he said.

In terms of coal production, the NDRC put forward conditions for key coal mines to maintain normal production during the Spring Festival, and for small coal mines up to safety requirements to resume production. It also urged coal mines to give priority to ensuring coal supply for power plants.

Meanwhile, Zhu urged local governments to impose strict limits on electricity use by enterprises either operating at excess capacity, or consuming much energy and producing heavy pollution.

The MOR readjusted coal transportation plans, aiming at increasing transport volume and improving transport efficiency of fuel coal. It had beefed up coal loading since January 26, with the amount rising to a record of 36,000 cars per day from 34,000 cars, or 30 percent more than a year ago. Under the emergent and special circumstances, the railway sector was urged to first ensure coal transportation to the country's 74 power plants under key supervision.

The MOC did its utmost to ensure smoothness of major trunk lines and "green channels" so that important materials could be transported safely with transport prices remaining stable. As for marine transport, all foreign trade transport was suspended to transport coal. If necessary, officials said, international shipping capacity would be called back to transport fuel coal.

Qinhuangdao is an important junction port for transporting coal from north to south China. Fuel coal transported from this port accounts for more than 70 percent of the national total. Ships from companies such as China Ocean Shipping (Group) Co. were diverted to Qinhuangdao ready to transport coal. Ships of some large state-owned enterprises were shifted to stand-by coalers. The MOR also strengthened coal transportation to Qinhuangdao via many railways.

All these measures took effect.

However, the difficulties were far from over. SERC figures showed that coal reserves stood at 21.42 million tons on January 25, less than half of the normal level. The State Grid said that its reserves were down 40 percent from last year to 16.58 million tons, the lowest level in its history.

Cost, not quantity, the problem

According to China National Coal Association, in 2007 the country's total coal output hit 2.52 billion tons, a year-on-year increase of around 8 percent. "Such an increase is quite rapid in recent years and the increased volume is quite large," said NDRC's Zhu.

In his analysis, coal shortages were caused by various factors. Some coal mines had gone on recess ahead of the Spring Festival, while many regions had closed small, unsafe mines as part of the national campaign for safe coal production, leading to a decrease in supply, he said.

Jiang Zhangshui echoed these remarks. In 2007, his Zhejiang Tianma Thermal Power Co. Ltd. signed contracts with many coal mines in Shanxi Province, one of China's major coal producers, but delivery failed because some of the coal mines were closed down.

The state has put forward proposals to increase coal supplies with the prerequisite of securing safety.

However, since coal prices have risen rapidly, the deeper reason for fuel coal shortages may be that power prices are not linked with coal prices.

In early January, China Southern Power Grid reported to the NDRC that south China would face a tight power supply and that coal shortages might reach 10 million tons. The reasons were that coal prices remained high and the heavy snow hindered coal transportation.

The high coal prices, not the shortage of coal, have hit the power plants hardest. Take Zhejiang Tianma Thermal Power Co. Ltd. as an example. Coal with ex-factory price of 250 yuan ($34.72) per ton is sold to the thermal power plant at 800 yuan ($111.11) per ton. Since the electricity price has not been raised, the profits at power plants are being squeezed.