BEIJING, Dec 30: China will end price controls on the coal used for generating electricity from 2006 and allow miners and power firms to negotiate their own prices, the country’s top economic planning body said in a statement.

The strategy was meant to lead to more stable prices and Beijing encourages long-term contracts, the National Development and Reform Commission said in a statement on its Web site.

The move could lead to greater pressure on officials to loosen electricity tariffs as well, with generators already complaining that profit margins are suffering because they are unable to fully pass on increases in raw material costs.

However if there were sharp spikes or falls in coal prices, or the possibility of such changes, the government could still step in to control costs, the commission said.

After the controls have been abolished, a price index would be set up to allow the government and firms to strengthen monitoring of coal prices, the statement said.—Reuters