Since May 1, the average price of electricity sold by the provincial electricity grid has been reduced from 0.57 yuan (7 US cents) per kilowatt hour to 0.49 yuan (6 US cents), contributing to a decrease of 5 billion yuan (US$600 million) in consumers' electricity fees every year.

Lin Lin, deputy director of the Guangdong Price Bureau, told a press conference in Guangzhou yesterday that the reduction in electricity prices would benefit economic development in Guangdong Province.

By the end of 2001, the average electricity price in Guangdong Province was 0.72 yuan (9 US cents) per kilowatt hour, much higher than the average level on the Chinese mainland of 0.368 yuan (4 US cents).

The price of electricity for industrial use was especially high in Guangdong and was even higher than the developed countries except Japan. This situation resulted in a lot of foreign-funded projects with a heavy power consumption moving to East China, where electricity prices were comparatively low.

Lin said the investment environment in Guangdong will be upgraded as the gap narrows between electricity prices in Guangdong Province and in other provinces.

The deputy director also said the reduction of electricity prices would strengthen the competitive power of products made by enterprises in Guangdong Province.

"With higher electricity costs, products from our province - especially those with a heavy power consumption - are not as competitive on both the domestic and international market as the same products from other provinces," Lin said.

In addition, the deputy director said the decrease in electricity prices would encourage consumption among farmers in Guangdong Province.

The Guangdong government plans to lower household electricity prices in the countryside to below 0.79 yuan (9.5 US cents) per kilowatt hour by the end of this year, compared to 0.85 yuan (10 US cents) last year.

Lin said that, in this way, farmers will be able to buy more electrical household appliances, whereas the cost made them wary about using electricity in the past.

Lin told the press conference that the price of industrial electricity will decrease by 0.08 yuan (1 US cent) per kilowatt hour, that of commercial electricity will decrease by 0.13 yuan (1.6 US cents) and that of household electricity by 0.03 yuan (0.36 US cents).

The deputy director of the Guangdong Price Bureau explained that the specific historic background of the province is to blame for the extremely high electricity prices.

(China Daily May 14, 2002)