China power situation building to crisis

China''s appetite for energy is huge, but smaller power producers are squeezed between the rising cost of coal and protected end-user tariffs.

As Shenhua Coal, China's largest coal producer, gears up for a $1.5 billion international listing , smaller domestic players are taking the opportunity created by a renewed focus on the sector to voice their complaints.

They claim a two-tier pricing system favouring large coal producers such as Shenhua, consumers, and a handful of publicly listed, well-connected IPPs such as Huaneng, Datang and Huadian Power, is creating a skewed market.

While the smaller power producers have to buy coal at the market price, the big three power producers are able to suck up coal at price levels far below the market price.

The biggest, publicly-listed IPPs buy coal...

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