China will probably raise electricity prices for a third time by the end of this year to help narrow losses at power producers, an official from China Huaneng Group, the nation's biggest state-owned utility, said yesterday.

The increase would unlikely be enough to cover the cost of coal, the official said in Beijing.

The Chinese government raised power tariffs in August, its second increase this year, after domestic coal prices reached a record in July, Bloomberg News reported. The higher prices failed to prevent losses at power utilities.

Unit Huaneng Power International Inc said last month it expected a full-year loss after reporting a third-quarter deficit of 2.2 billion yuan (US$322 million).

The higher coal costs and government-capped electricity tariffs had put power producers under operational pressure, the official said.

The Chinese government controls fuel prices to limit their impact on inflation. China Huaneng Group said it planned to cut annual spending by 5 percent this year because of a "significant decline" in nine-month profit.

To help narrow generators' losses and ease China's power shortages, the government raised the price of electricity sold to grid operators by 6 percent in August. Benchmark domestic coal prices climbed to a record 1,080-yuan per metric ton on July 23, according to data posted on the China Coal Transport and Distribution Association's Website.

Huaneng Power shares rose as much as 7 percent in Shanghai and traded at 7.10 yuan at 2:38pm. The company's Hong Kong shares climbed as much as 5 percent. The stock has tumbled 55 percent this year, compared with the Hang Seng Index's 50 percent drop.

(Shanghai Daily November 14, 2008)