China's Guangdong faces severe power shortage

BEIJING, March 6 (Reuters) - China's manufacturing hub, Guangdong province, will give heavy subsidies to small power producers and speed up the addition of new capacity to tackle a severe power crisis this year, an official said on Thursday.

Li Miaojuan, head of the Guangdong's Development & Reform Commission, said generating stations fuelled by oil and gas previously meant for closure due to their size and high costs would be allowed to operate to help plug an estimated 10 GW shortfall at the peak.

"We face a grave power supply situation this year ... brought by the recent snow disaster since Jan. 24 that cut supplies from the western region," Li told reporters at a provincial session during China's annual parliament meeting.

The shortage exceeded an earlier forecast of 6.5 gigawatts, Li said, as the coldest winter in half a century crippled the already rickety power grids in country's southwestern and central parts, key electricity supplier to Guangdong.

Li said power cuts would first hit sectors that were highly polluting and highly energy-consuming.

"Sectors like small steel plants will have to shut altogether when it's necessary."

Oil traders from Guangdong, the country's largest oil user by region, have said the subsidies are likely to drive up the country's demand for imported fuel oil, a heavy refinery product that are burned by Guangdong's small power plants.

China, worried about fanning inflation already at 11-year high, has ruled out near-term price increases to energy including power, gas and refined fuel.

To battle the crisis, Guangdong will also accelerate building new power plants and distribution lines, said Li, who urged Beijing to speed up approving its newly submitted plans to boost electricity investment. She did not give details.