Small businesses suffer from power supply cuts

Small businesses across China are up in arms over an energy law that makes local authorities cut power supply every month.

The local authorities' move, aims to meet the target set by the government to reduce energy use by 20 per cent in each unit of gross domestic product by the end of the 2010.

It is part of China's five-year plan starting from 2005 to boost the country's economy, according to Xinhua news agency.

A number of factories in Wen Zhou in southern China have been affected severely because of the cuts. One of the local plant managers Wu Lin, of Ouhai district, told the national newspaper China Youth: “It's really bad for our business and we're very worried.”

He said: “The local authority should have started the process long time back, and now they cut the electricity supply every 20 days a month, we really don't know how we are going to survive.”

The electricity cuts have also increased a demand for diesel fuel and candles across many parts of the country. This has led to a shortage of the fuel.

“The primary reason for the diesel shortage is that they [local authories] have cut the power supply to a lot of industries,” said KF Yan, research director at consultancy Cera in Beijing, according to the Financial Times.

The shortage of diesel fuel has in turn caused some embarressment for small businesses. In another southern city Chongqing, a local crematorium made headlines when it was discovered that corpses were stacked in fridges as there was no diesel fuel for the crematorium to operate fully.

Manager Fang Ai told the Chonging Evening Daily that the crematorium stopped operating temporarily.

he said: “Our place should be able to burn 10 corpses a day, but because of the shortage, we are now stopped working. And some of the families' funerals have also been severely affected.”

According to Xinhua, there were 15.6 per cent decline in China's energy intensity from 2005 to 2009, but it rose up again by 3.2 per cet in the first quarter of this year.

In May, Premier Wen Jiabao warned that he would use an “iron fist” to meet the five-year goal.

Officials in Beijing revealed that they intend to target the industrial sector, which have spent up to 70 per cent of the country's electricity, to achieve the goal.

However, local governments heavily depend on the industrial sector, mainly those state-owned biggest energy consumers, to get sufficient tax revenue to stay solvent.

Therefore, local officials have been searching for alternative way to save enegy by cutting power supplies to those local enterprises and small businesses.