"BEIJING, June 7 (Reuters) - China plans to impose heavy fines on thermal coal producers if they have been found to have raised prices in violation of state guidelines, the official news agency Xinhua said on Tuesday.
The National Development and Reform Commission, the country's powerful economic planning agency, will send inspection teams to big coal producing regions to root out violators, and will impose fines of up to five times the amount of revenues earned by any price increases, Xinhua said.
The NDRC said at the end of April that it would crack down on all illegal pricing activities in the coal sector, saying that price rises "in any form" were strictly prohibited.
This new round of inspections is the latest move in a campaign aimed at giving power plants every incentive to boost output during the peak summer consumption period, with China expected to face capacity shortages of 30-40 gigawatts.
The shortages have been blamed on China's fixed tariff system, with the government, beset with inflation, reluctant to allow power plants to pass soaring coal costs onto their customers.
At the end of May, it finally agreed to raise the price of electricity for industrial, commercial and agricultural use in 15 provinces, the first hike since 2009. ID:nSGE74U001
But China is concerned that any positive impact on power output brought about by the price hikes will be undermined by opportunistic coal price increases.
Contract prices for thermal coal supplied directly to power plants have remained unchanged since last year, despite a surge in prices on the spot market.
The NDRC last week urged local coal producers to boost output in order to tackle summer power shortages, and also said it would encourage more imports. ID:nL3E7H11GO
(Reporting by David Stanway; Editing by Jacqueline Wong)
