* Prices paid to utilities to rise to reflect higher fuel
* China cutting prices for coal-fired generation
* Efforts to encourage more natural gas power held back by
(Adds detail, background on winter gas shortages)
BEIJING, Oct 15 China will raise the on-grid
prices paid to power generators that use natural gas to
encourage the use of cleaner forms of energy and address the
impact of possible supply shortages, the country's top planning
agency said on Tuesday.
In a notice posted on its website (www.ndrc.gov.cn), the
National Development and Reform Commission (NDRC) said recent
natural gas price hikes had raised generation costs and power
prices needed to be adjusted accordingly.
Specific power price changes will be determined "soon" on a
provincial level, it said.
The announcement, dated Sept. 30 but published on Tuesday,
also confirmed that on-grid coal-fired power prices have been
cut in order to reflect falling coal prices.
On-grid prices paid for coal-fired generators have been cut
on a region-by-region basis, ranging from around 0.009 yuan per
kilowatt hour in Beijing to 0.025 yuan in Shanghai.
China, desperate to address long-standing air pollution
problems, has vowed to use pricing mechanisms to encourage
cleaner power generation, and will also pay higher prices to
utilities that have installed emissions control technologies.
But its ambitious plans to encourage natural gas-fired power
are being held back by shortages which could drive generation
costs even higher and reduce the incentive for utilities to make
the switch from coal.
The NDRC said in a separate notice posted at the weekend
that China is facing a gas supply crunch this winter and that
utilities will be encouraged to make cuts in natural gas-fired
power generation during the peak gas demand season.
"With the unusually high growth in gas demand, the gap
between supply and demand could be even wider this winter and
next spring. If temperatures are persistently low, the gas
supply situation will be even more severe," it said.
NDRC asked China's main gas fields, including Changqing and
Tarim in the northwest and Puguang in the southwest, to run at
maximum rates during the peak demand season and urged oil majors
to accelerate construction of new gas fields.
It also called for more imports from central Asia via
pipelines as well as the faster construction of liquefied
natural gas (LNG) terminals in Zhuhai on the southeast coast and
Tianjin and Tangshan in the north to ensure they will come
onstream before winter arrives.
Zhou Jiping, chairman of the country's largest gas producer
and main gas importer PetroChina , said in
May that the company planned to supply 107 bcm of natural gas
this year, while demand would reach 115 bcm.
He said it would take at least four to five years to build
up new supply capacity and it would still be insufficient to
keep up with surging demand.
($1 = 6.1079 Chinese yuan)
(Reporting by David Stanway and Judy Hua; Editing by Kim
Coghill and Anupama Dwivedi)