RPT-UPDATE 2-China warns on winter energy supply

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By Jim Bai

BEIJING, Aug 21 (Reuters) - China warned on Thursday that its energy supply problems were likely to last into winter as it struggles to ensure stable sources of coal, oil and power, the People's Daily reported, citing a senior official.

The pressure to secure raw materials will be "considerable", according to the report, which quoted an unnamed official of the National Development and Reform Commission (NDRC), the top government planning agency.

The NDRC did not offer a reason for the persistent tightness in supplies, but China is only now beginning to emerge from several months of its worst summer power supply crisis in four years, after surging coal prices turned power company margins negative, prompting many to curb supplies.

It has also battled sporadic shortages of refined fuels as cheap domestic pump prices and soaring global crude oil costs deter refiners from fully meeting demand.

Power and coal supply in central and southwestern China might worsen in the coming winter when hydropower generation declines seasonally, the report said, while analysts warned that transport bottlenecks could also stymie coal shipments in the winter.

"There will be additional coal that needs to be transported for heating purpose," said Wang Jing, a power analyst with Hongyuan Securities.

Many provinces have already introduced power rationing even during the summer, when hydropower output is normally high.

But Wang added that the winter shortages should not be worse than this summer as two increases in on-grid power tariffs -- plus another one widely expected later this year -- should revive margins, encouraging power firms to rev up operation.

"China is not short of coal, but short of the kind of coal that is sold below market prices," she said.

The world's second-largest electricity consumer this week raised the on-grid power tariff for thermal power plants by about 5 percent in the second hike in as many months, although most analysts said the two increases for a total of around 10 percent were still lagging far behind the surge in coal costs.

Beijing controls power and oil products prices and has been reluctant to raise them on concerns of stoking inflation, but has been forced gradually to relent on some pricing.

China raised oil products prices by nearly 20 percent in June, the largest ever hike and the first in eight months, while also piling pressure on refiners to bolster stockpiles and boost imports to fully meet demand through the summer Olympics.

The government has also provided subsidies, in the form of rebates on value-added tax, to state-owned refiners to keep them operating at near full-capacity in recent months. Power firms have lobbied for similar treatment, as yet to no avail.

This summer's nationwide power shortages have forced metals smelters to slow operations, crimped industrial production and threatened to stoke oil demand, and officials are keen to show they're working hard to head off a repeat this winter.

"While still dealing with peak summer power demand, the NDRC has started relevant works to cope with winter power demand and coal storage," Li Yangzhe, deputy chief of the Bureau of Economic Operations under the NDRC, said in a statement on its website. (Reporting by Jim Bai; Editing by Ben Tan)