A coal mine in Xiaoyi City, Shanxi Province Photo: VCG

China's National Development and Reform Commission (NDRC), the country's top economic planner, will launch special investigation into the implementation of medium- and long-term contracts signed by coal suppliers in 2022. The commission requires the medium- and long-term contracts signed by coal enterprises to account for more than 80 percent of the resources they own.

The move represents the latest efforts by Chinese authorities to stabilize energy supply and clear away potential clouds on economic activities amid mounting global uncertainties, including the protracted Russia-Ukraine tensions that have stretched global energy supply.

According to a notice issued by NDRC, a special investigation will be conducted soon, and relevant enterprises and authorities are required to conduct self investigation and make rectifications in advance.

"Coal enterprises need to sign abundant medium- and long-term contracts, and the supply of coal to electricity and heating enterprises shall all be covered by such contracts," reads the notice.

Every medium- and long-term contract signed should stimulate the price or coal pricing mechanism within a reasonable range, and elements including quantity, quality, period, flow, transportation methods, and responsibility for breaching contract should also be clearly identified, according to the notice.

All coal contracts signed should be recorded in the national coal trading center for online supervision, and the contracts' implementation needs to be reported online every month. No fabrication and "discounts" on implementation are allowed. 

The notice also stressed that investigation teams will conduct inspection based on a variety of ways including examining original data, discussion talks and field research. Enterprises which carried out contracts in a good way will be rewarded and those that executed the contracts poorly will be held accountable. The conditions of contract implementation will be included in enterprises' credit record, and be linked to their capacity approval and transportation resources allocation, according to the NDRC.

Currently, China's coal self-sufficiency rate has exceeded 90 percent. Industry insiders expect to see coal prices drop in late March, when most areas in North China will end heating seasons and demand will dwindle as a result. 

The NDRC stipulated in February that the long-term transaction price of coal loaded on ships at Qinhuangdao Port, China's main coal port in North China's Hebei Province, should range from 570 yuan ($90.2) to 770 yuan per ton, including tax.

Global Times