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Coal pricing system could become more market-oriented

By Wan Zhihong (China Daily)
Updated: 2006-12-26 08:55

China will further improve its coal pricing system to make it more market-oriented.

Jiang Zhimin, vice-chairman of the China National Coal Association said: "Next year the coal and power companies may have more decision-making power over coal prices to make them market-oriented."

Domestic media reports had earlier said that next year's coal ordering conference, which is used to secure the coal supply to power plants for the coming year, would be cancelled.

TheNational Development and Reform Commission(NDRC), the nation's top economic watchdog, declined to comment on the reports, saying that it will soon make a more detailed announcement about next year's conference.

"We have so far not received any notice about the cancellation of the conference," said a spokesman for China Coal, the nation's second-largest coal company.

The conferences have always been noted for their tough negotiations between coal and power firms over coal prices. While coal companies demand a large price hike, power companies refuse to budge.

Coal pricing has long been a bone of contention between power generators and coal producers. Some analysts said that the rising coal price has eaten into power generators' profits.

"China's coal price is expected to rise steadily with the factors such as the environment, safety and resources being included in the cost of coal production," said Jiang.

The coal price rise will be a gradual process, he added.