Energy rationing leads to loss of money for private enterprises in industrial areas

SHANGHAI - Power shortages across the country in recent weeks have forced some provinces to ration electricity for industrial use, causing severe financial losses to private enterprises in Central and East China.

In previous years, electricity rationing usually occurred in mid-summer and winter, when the use of air conditioners and electric heaters increases the demand for power. This year, however, the electricity supply shortages began in April because of insufficient coal supplies and a rocketing price of oil, according to Central China Grid Co Ltd, one of the largest branches of the State Grid.

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More than 400 million people in Hubei, Hunan, Henan, Jiangxi and Sichuan provinces, as well as Chongqing municipality, rely on the Central China grid network, which has coal stockpiles sufficient for nine days, fewer than the recommended 15 days.

While residential electricity supplies will be maintained, the electricity for industrial use will be restricted, according to the State Electricity Regulatory Commission.

Power shortages in Zhejiang have affected small and medium-sized enterprises since last year. To those enterprises using fewer than 2,000 kilowatts a day, power has been shut off every other day.

"The electricity rationing has significantly slowed production and I have had to set up a power generator in order to continue operations," said Hu Xudong, who runs the Zhejiang Fuyang Jin'aobo Shoe Co Ltd.

He said the electricity shortages will probably result in losses of up to 3 million yuan ($460,500) this year.

In Zhejiang province's Taizhou city, small enterprises that have an annual output value of less than 5 million yuan are not allowed to use electricity between 7 am and 5:30 pm, while medium-sized enterprises that have an annual output value of more than 5 million yuan are being asked to cut their use of power every two days.

"As a medium-sized enterprise with an annual output value of over 100 million yuan, we are luckier than the smaller ones that have to raise salaries and subsidies for people to work in the night, " said Ye Mingchun, the owner of Zhejiang Tianyiqi Shoes Co Ltd.

Ye said that most factories in Zhejiang have their own power generators to use in case of electricity cuts, which can happen without any advance notice.

East China Grid Co Ltd declined to comment on the current electricity supply in East China areas.