3% hike in fuel prices for nation's motorists
By Richard Fu |
October 26, 2010, Tuesday
|
Print Edition
Print Edition
MOTORISTS across China will have to pay up to 3 percent more for fuel from today, after the government raised prices at midnight.
This hike reflects higher crude costs and brings rates back to the level when prices were last cut in June.
The National Development and Reform Commission, the top planner which sets energy prices, also said that it will unveil a revamped fuel pricing mechanism by the end of the year to make the process more transparent.
The NDRC raised the price of gasoline by 230 yuan (US$34.5) a ton, or 0.17 yuan a liter, and diesel by 220 yuan a ton, or 0.19 yuan a liter. That equals an increase of 2.88 percent and 3 percent, respectively.
On June 1 the commission cut prices by the same amount.
At Shanghai's pumps, the price for widely used 93-octane gasoline is now 6.87 yuan a liter, up from 6.68 yuan, while zero-grade diesel has risen to 6.77 yuan from 6.59 yuan. Pump prices vary among provinces.
Under a pricing mechanism introduced in the end of 2008, the NDRC is allowed to revise prices when a basket of international crude prices change more than 4 percent over 22 working days.
The government also considers other factors, such as inflation and supply and demand when reviewing fuel prices.
The NDRC said it would have raised prices by a bigger margin in the latest hike if it didn't take into account the foreign exchange rate factor. A rising yuan recently lowered the purchase costs for crude, which is priced in US dollars, it said.
The market had expected a hike as early as last week, based on price gains in global crude markets, and market sources said refiners such as Sinopec and PetroChina had scaled back wholesale pending the increase.
"Signs of a supply shortage forced the NDRC to announce the latest price hike because it wants to ensure a stable supply, though inflation is a concern," said a C1 Energy analyst.
"The move is not a shock as China is keen to slow down the economy and improve energy efficiency through interest rate hikes and incremental fuel price increases," Mirae Asset Securities analyst Gordon Kwan said last week in anticipation of the hike.
"This would encourage fuel conservation while restoring the required cash flow for reinvestment in refineries and petrol station networks, thus ensuring no fuel shortage, particularly during the November Guangzhou Asian Games."
While the latest hike will add to costs for drivers, manufacturers and farmers, it will lift the profit margin of Sinopec, Asia's largest refiner.
This hike reflects higher crude costs and brings rates back to the level when prices were last cut in June.
The National Development and Reform Commission, the top planner which sets energy prices, also said that it will unveil a revamped fuel pricing mechanism by the end of the year to make the process more transparent.
The NDRC raised the price of gasoline by 230 yuan (US$34.5) a ton, or 0.17 yuan a liter, and diesel by 220 yuan a ton, or 0.19 yuan a liter. That equals an increase of 2.88 percent and 3 percent, respectively.
On June 1 the commission cut prices by the same amount.
At Shanghai's pumps, the price for widely used 93-octane gasoline is now 6.87 yuan a liter, up from 6.68 yuan, while zero-grade diesel has risen to 6.77 yuan from 6.59 yuan. Pump prices vary among provinces.
Under a pricing mechanism introduced in the end of 2008, the NDRC is allowed to revise prices when a basket of international crude prices change more than 4 percent over 22 working days.
The government also considers other factors, such as inflation and supply and demand when reviewing fuel prices.
The NDRC said it would have raised prices by a bigger margin in the latest hike if it didn't take into account the foreign exchange rate factor. A rising yuan recently lowered the purchase costs for crude, which is priced in US dollars, it said.
The market had expected a hike as early as last week, based on price gains in global crude markets, and market sources said refiners such as Sinopec and PetroChina had scaled back wholesale pending the increase.
"Signs of a supply shortage forced the NDRC to announce the latest price hike because it wants to ensure a stable supply, though inflation is a concern," said a C1 Energy analyst.
"The move is not a shock as China is keen to slow down the economy and improve energy efficiency through interest rate hikes and incremental fuel price increases," Mirae Asset Securities analyst Gordon Kwan said last week in anticipation of the hike.
"This would encourage fuel conservation while restoring the required cash flow for reinvestment in refineries and petrol station networks, thus ensuring no fuel shortage, particularly during the November Guangzhou Asian Games."
While the latest hike will add to costs for drivers, manufacturers and farmers, it will lift the profit margin of Sinopec, Asia's largest refiner.
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