Premier Wen Jiabao has instructed central government to put a stop to illegal construction of power projects around the country. At a meeting of the State Council, China’s cabinet, Wen demanded that all districts and related departments move to stamp out the ‘reckless construction of projects without government approval’.

Central government is determined to cancel all unqualified power plant projects and deal with illegal projects in accordance with its regulations.

In order to guarantee the stable supply of electricity, Wen said, China has to strengthen clean power plant construction but at the same time curb demand.

Central authorities are set to launch a policy in about two months to clamp down on unauthorized power plants, according to a report by investment bankers Merrill Lynch. It will no longer tolerate plants “being built or planned without the explicit approval of central government,” Merrill Lynch said in its report, citing two unnamed industry sources.

The policy will be executed by the National Development and Reform Commission (NDRC), and was expected to be unveiled during March. The plan is aimed at stopping the 80 GW or so of unapproved existing and planned projects. More recent estimates by the NDRC put the figure at 120-140 GW.

This is not the first time China’s leadership has issued such warnings. China has suffered severe and widespread power failures over the past few years (last year energy shortfalls reached crisis levels, with a 30 GW shortage in the summer) and provincial governments eager to cash in on the market have rushed to build new plants, often ignoring environmental considerations and bypassing proper planning procedures.

Despite repeated warnings from Beijing, many provinces are still engaged in the building of projects as electricity consumption rises sharply. Beijing wants the development of the power industry to be co-ordinated with the country’s overall economic and social development.

China is already planning the construction of new power plant aimed at more than doubling total capacity to about 900 GW by 2020 from the current 400 GW.