Jiang Zhangshui wears an expression of worry on his face. As president of Zhejiang Tianma Thermal Power Co. Ltd., he's had to keep his eyes on the snow falling in Shaoxing, Zhejiang Province. During a lull in the storm he drives to the airport and flies to Beijing.

Like his counterparts at many other power plants across the country, he has to find coal, so his company can continue to generate electricity and provide hot water and electricity to businesses, schools and hotels in his region.

Since mid-January, when heavy snow hit central, east and south China, supplies of coal and power had been tight. According to the National Development and Reform Commission (NDRC), 17 provinces, autonomous regions and municipalities suffered power shortages and the shortage of electricity nationwide was about 39.9 million kw.

And it's not only power plants that are worried about the coal shortages.

On January 27, the State Council held an emergency teleconference, participated by the NDRC, the Ministry of Railways (MOR), the Ministry of Communications (MOC), the State Electricity Regulatory Commission (SERC) and the State Administration of Work Safety (SAWS), to discuss the severe power disruptions caused by prolonged snow, rain and cold weather.

At a conference held in Beijing on January 28 to relay information on thermal power companies, Jiang and some other entrepreneurs anxiously explained their predicament with the tight coal supply. On the same day, the NDRC also called a meeting to resolve difficulties brought about by the bad weather.

Coal shortages closed more power stations with an aggregate capacity of up to 40.99 million kw, said the SERC. The affected capacity equals up to 40 percent of last year's expansions.

The bad weather affected both supply and demand for coal. Coal transport was hampered by a combination of the bad weather and rising passenger rail traffic as the Spring Festival, the major family reunion occasion in the country, approaches. Simultaneously, cold weather increased coal demand for heating, and heavy rail traffic was also pushing up demand for coal, which helps power the rail system.

Only an average of less than 25 percent of the daily demand for coal shipments by rail had been met, according to the MOR. On January 26, snow and sleet cut off power lines and halted at least 136 trains in central Hunan Province on a major rail artery linking Beijing with Guangzhou, capital of south China's Guangdong Province.

Urgent transport needs

Government departments adopted various measures to transport coal in an attempt to win the battle against heavy snows.

The NDRC started the coordination mechanism for economic operation and established a daily reporting system supplying monitoring information, carrying out real-time monitoring of coal output in major coal production provinces, railway loading, ship loading as well as coal reserves and production in major power plants with staff solving problems in coal and electricity supply around the clock.

Moreover, the NDRC drafted an emergency document on requirements of production and transportation of power-generating coal. Its orders were to ensure the supply to large power plants and suspend coal supply to small enterprises, especially small thermal plants. For example, ports in Qinhuangdao, Hebei Province, were required to ensure coal transportation to large power plants and stop shipping coal to other enterprises. "It's impossible to solve the problem by increasing electricity generated by small thermal power plants," said Zhu Hongren, Deputy Director of the Bureau of Economic Operation of the NDRC.

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.