China is waiting for the right opportunity to adjust its refined
oil pricing mechanism, said a senior official on Monday
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).
However, the government has to consider people's capacity to
adapt to the changes, said Chen.
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.
The vice chairman 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.
Chen said the country will impose a fuel oil tax in the near
future.
To date, the Chinese government has endeavored 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 maneuver.
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.
(Xinhua News Agency April 3, 2007)