SHENZHEN: A 22.1 billion yuan (US$2.7 billion) project to upgrade the power grid in the booming southern city will begin this year.

The investment, as part of the 11th Five Year Plan of Shenzhen, will enable the city to nearly double its current electricity generating capacity, according to the investor Shenzhen Electricity Supply Bureau, a subsidiary of Guangdong Power Grid Corporation. The corporation supplies electricity to all six districts of the city, excluding Shekou Industrial Zone.

But in recent years, there have been problems with power shortages in the city.

At the end of 2010, the city will have at least 200 110-kilovolt or above transformer substations, with a total capacity of 58 million kilowatts, of which 103 are newly built, said Jin Jimin, director of Shenzhen Electricity Supply Bureau during a working conference on Monday.

He forecast that the city would consume 47.5 billion kilowatt-hours of electricity this year, with the demand peak for the Shenzhen power grid reaching at least 8.3 million kilowatt-hours an 11 per cent increase on last year.

"The power shortage will remain acute in the first half of the year, but will be gradually eased starting from the third quarter. We expect the electricity demand and supply could meet balance in 2007," he said.

The improvement should be attributed to the company's continuing investment in upgrading the power grid, he added.

For this year alone, the company will invest 4.2 billion yuan (US$518 million) to further increase capacity by nearly 6.1 million kilowatts, he said.

Vice-Mayor Chen Yingchun urged the power distributor to ensure normal supplies to the residents, important entities and enterprises.

The government would reasonably adjust the electricity price for corporations to encourage them to use power in non-peak periods, he said.

Power shortages, now a nationwide problem, first occurred in the relatively developed Guangdong Province, where most cities, including Shenzhen, are export-oriented.

Many companies are buying electricity generators to cope with power shortages, which have lasted for up to three days a week in the past.

The statistics from Shenzhen Customs showed that 257 local companies imported 2,607 units of electricity generators last year, which was a drop of 5.4 per cent from 2004.

Customs have asked the companies to re-evaluate the necessity of buying electricity generators this year given the expected improvement in the situation.

Editor: Yan