China is experiencing an acute power shortage with a nationwide electricity shortfall at 70 gigawatts, the equivalent of almost Britain’s entire generating capacity.

State media has described the crisis as China’s worst-ever power shortage. With coal prices soaring and supplies disrupted by some of the most severe winter weather in years, it is certainly the most acute since 2004 when demand outstripped supply by 40 gigawatts. A rush for individual generators and to buy diesel to fuel them sent state firms into the international markets, provoking a spurt in crude oil prices.

So worried is the government that on Friday it put in place a two-month ban on coal exports.

The Ministry of Communications said: “During the Chinese New Year and parliamentary meeting, all thermal coal exports will be suspended. Where there is a need, all international shipping capacity will be diverted for domestic transportation requirements."

The coal shortages have forced the five biggest electricity producers to close 90 power stations - with a combined capacity of more than 20,000 megawatts - in northern and central China. Coal stockpiles at the plants have dropped below the "caution mark" of three days' requirements.

Officials have ordered some mines, which had closed as part of a sweeping crackdown on unsafe collieries in which some 3,000 people die each year, to reopen if they are deemed now to have met safety standards.

The shortage could not have come at a worse time for the ruling Communist Party. The leadership is anxious to ensure plentiful supplies of power for the most important holiday of the year, the Lunar New Year holiday,which begins on February 7, just as rising prices – particularly for food – are fuelling popular discontent.

The transport ministry has roped in two state shipping giants to help move coal more swiftly to southern China. China Shipping Group has diverted six ships from its overseas shipping fleet to queue at the ports, while Cosco has diverted 11 vessels.

All major ports, including Qinhuangdao, China’s largest coal terminal have been told report daily loading volumes to the ministry.

Premier Wen Jiabao highlighted the crisis at the weekend. He described coal reserver at power plants as dangerously low. He issued an order to officials nationwide. "Urgently mobilise and work as one to wage this tough battle against disaster. The tense situation for coal, electricity, oil and transport nationwide is continuing to develop and could intensify. The most difficult phase has not passed."

China is the world’s top coal producer and consumer and remained a net exporter of the fuel in 2007 but its net exports plunged to just 2 million tonnes, compared with 25.1 million tonnes in 2006.

Chronic winter shortfalls of coal, which fuels 78 per cent of China’s electricity supply, have been aggravated by transport disruptions due to unusually heavy snow across central, eastern and northern China. The unusually icy temperatures have prompted a surge in demand for power as people try to keep warm.

In some areas, snow has also damaged power grids. Storms felled three power transmission towers last week along a major line from the huge Three Gorges Dam across the Yangtze river, disrupting a link in central China’s transmission system.

Transport by train has been disrupted by the snow just as the railways are already clogged with extra services laid on to cope with the hundreds of millions of people heading home for the new year holidays in what is the largest single migration on earth.

The core problem is that China’s economy is still caught between Marxist central planning and market forces. Domestic prices of coal have been liberalised and rose 14.2 per cent year on year in December while electricity prices rose only 2.1 per cent since these are capped to by the state to curb inflation. Utilities have chafed at caps on electricity rates that prevent them from passing the higher costs for coal on to customers.

Henry Li, an analyst at Core Pacific-Yamaichi, said: “The main reason behind the power shortages this time is rising coal prices. I don’t expect the government to raise power tariffs in the first half of 2008, so shortages will last till then.”

China’s crisis is being mirrored in South Africa where a chronic shortage of power has forced gold mines to close, slashing production and sending the price of the metal to a record high.

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