The government will not increase the price of refined oil or electricity until inflation is brought under control, a senior official from the National Development and Reform Commission (NDRC) said yesterday.

Xu Zhimin, director of the NDRC's economic operations department said the commission is in discussions with several cabinet departments on a range of measures to deal with inflation, rising energy prices and the plight of power companies.

It is possible the government will subsidize coal-fired electricity firms, which have seen their profits slide as a result of rising coal prices, Xu said.

"Subsidizing electricity generating companies is one possible option, but we are still considering and discussing suggestions from all sides," he told China Daily.

The NDRC has told provincial governments to urge major coal producers in their regions to refrain from increasing prices and to maximize their output, Xu said.

"I am confident China, which is rich in coal reserves, has enough production capacity to meet the growing demand," he said.

The price of coal for power generation has risen by about 10 percent this year, which has added about 30 billion yuan ($4.3 billion) to power companies' costs, he said.

Despite the soaring price of coal, the government has ruled out the possibility of raising power tariffs, as it would add to the pressure on inflation, which has already reached an "unacceptably high level", Xu said.

"Our top policy targets for this challenging year are curbing inflation and over-investment," he said.

"All the decisions we make, should help us to meet these goals."

Economic growth in the first quarter of this year was 10.6 percent, slower than the 11.9 percent reported for the same period of last year. However, the consumer price index - the key indicator of inflation - was up 8.3 percent year-on-year last month, and up 8 percent year-on-year for the quarter.

The government last month told the National People's Congress that it will spare no effort to keep the annual inflation rate under 4.8 percent.

Also at yesterday's press conference, NDRC spokesman Li Pumin ruled out the possibility of increasing the price of refined oil, saying that "lowering the inflation rate is the top priority" despite global oil price rises.

China's oil-refining companies have relied on subsidies from the government to offset rising costs as central authorities attempt to bring the country's crude oil prices in line with the global market.

"We are determined to deregulate the prices of resources, but timing has not been on our side so far," Li said.

(China Daily April 30, 2008)