China's Chongqing extends power curbs as drought drags on

Temperatures are expected to exceed 40 deg C until the weekend in some parts of the Yangtze delta. PHOTO: AFP

BEIJING (REUTERS) - The sprawling Chinese region of Chongqing, home to several large global automakers, has extended power curbs at factories, as a record heatwave and drought continue to wreak economic and environmental damage throughout the country's south-west.

Industrial firms were originally ordered to restrict output from Aug 17 until Aug 24, but formal curbs have been extended until Aug 25, according to a notice issued by Chongqing authorities on Wednesday (Aug 24).

Curbs will be gradually relaxed "in an orderly manner" once weather conditions have improved, it said.

Pangang Group Vanadium & Titanium Resources told the stock exchange in a filing on Wednesday its Chongqing subsidiary received the notice and would continue to suspend production.

"The specific recovery time will be subject to the notification of relevant departments in Chongqing," it said.

Honda Motor also said Thursday (Aug 25) its power product factory in Chongqing would remain closed this week.

"We don't know what to do until we see what the government tells us for next week," a spokesperson said.

The plant makes small-engine products like lawn mowers and tillers and does not manufacture cars.

Honda made 23 per cent of all of its power equipment in Chongqing last financial year. The factory was on summer vacation until this past Sunday (Aug 21) and suspended operations from Monday (Aug 22).

Power rationing

Chongqing and other parts of the Yangtze basin have been broiling under weeks of temperatures in excess of 40 deg C, causing crop damage and forest fires.

Power rationing has impacted firms in sectors like battery making and solar manufacturing. Toyota Motor said it used an in-house generator at its Sichuan plant to resume operations.

Although national forecasters reduced their heat alert level from "red" to "orange" from Tuesday (Aug 23), temperatures are still expected to exceed 40 deg C until the weekend in some parts of the Yangtze delta.

Sichuan depends on hydropower for around 80 per cent of its electricity, and dwindling water levels have left generators operating at much lower than their normal capacity.

Sichuan normally delivers large amounts of its surplus hydropower to other provinces. Coal-fired power plants in Anhui province and elsewhere have been under pressure to pick up the slack, according to state media.

GDP impact 'negligible' so far

"It's unclear how long this power will continue to be exported ex-province, considering the severity of the local power shortage, but cross-province transmission is usually given highest priority in China's power dispatch planning," said Mr David Fishman, a power expert with the Lantau Group consultancy.

"If these exports are suspended, the already-tight power supply in eastern China, which is enduring its own heat wave, will be further affected," he said in a research note.

China's State Grid Corporation is now delivering 130 million kilowatt-hours of power per day to Sichuan, state broadcaster CCTV said Wednesday.

Economists at ANZ said in a note Tuesday it was unlikely China would see a repeat of last year's nationwide energy shortages, which were caused by tight coal supplies, adding that the impact of the current power crunch on gross domestic product was "negligible" so far.

Join ST's Telegram channel and get the latest breaking news delivered to you.