Beijing, April 03: China is waiting for the right
opportunity to adjust its refined oil pricing mechanism but
disadvantaged groups will be subsidised, a senior official has
said.
Reform of the refined oil pricing mechanism is closely
tied to international oil price fluctuations, said Chen
Deming, vice chairman of the National Development and Reform
Commission (NDRC), the country's top planning body.
However, the government has to consider people's capacity
to adapt to the changes, Chen said.
The purpose of the mechanism is to link the prices of
refined oil products on the domestic market in China more
closely to their international equivalents.
Chen said that to make the reform more palatable, the
government will give subsidies to sectors such as food
production, city transportation, agriculture and forestry.
Low income groups will also receive allowances, he added.
China will impose a fuel oil tax in the near future,
Xinhua news agency quoted him as saying in the south-western
city of Chengdu.
To date, the Chinese government has endeavoured to ensure
that prices for refined oil products meet Chinese conditions.
However, the fluctuation of international oil prices, which
can move sharply upwards, leaves the government little room
for manoeuvre.
In March 2006, China made a first attempt to lift refined
oil prices, while setting up a mechanism to offer subsidies
to disadvantaged communities and public service sectors and
collect special fees from oil producers who sell domestically
produced crude oil.
Experts said cutting domestic refined oil prices might
offer the opportunity to levy a fuel oil tax, first proposed
way back in 1994 but constantly delayed out of concerns that
it would impose too heavy a burden on professionals such as
bus and taxi drivers.
Bureau Report
First Published: Tuesday, April 03, 2007, 00:00