Monthly fix for jet fuel price
By Winny Wang |
July 13, 2011, Wednesday
|
Print Edition
Print Edition
CHINA'S top economic planning body will adjust ex-factory price for jet fuel on a monthly basis starting in August to better reflect the fluctuations in global oil prices, and the move is also seen as a prelude to reforming the pricing mechanism of retail gasoline.
The ex-factory price will be based on the after-tax import costs for the fuel plus a premium, and the premium will be adjusted once a year in negotiations between buyers and suppliers taking into account demand, freight, transaction volume and global crude price, the National Development and Reform Commission said on its website yesterday.
The new price will take effect on the first day of each month, it said.
"The reformed pricing mechanism marks a big step toward a market-oriented system, and also serves as an experiment for reforming China's refined fuel market," the NDRC said.
China had previously adjusted its ex-factory jet fuel price at the same frequency as those for retail gasoline and diesel, which are priced based on the cost of a basket of crude.
Under the mechanism introduced in late 2008, the NDRC can revise gasoline and diesel prices when prices of key global crude oil in the basket change more than 4 percent over 22 working days. In early June, the State Council approved a proposal by the NDRC for a quicker reform of the pricing mechanisms for oil, natural gas, water and electricity.
"Domestic gasoline and diesel prices are expected to be more market-oriented following the adjustment of ex-factory jet fuel prices although the reform won't happen too soon," said energy expert Lin Boqiang. But Lin said the monthly adjustment of ex-factory jet fuel price "will lead to more frequent adjustments in jet fuel surcharges."
Chinese carriers raised fuel fees on domestic routes longer than 800 kilometers to 140 yuan (US$22) from 90 yuan in May and those on shorter routes to 80 yuan from 60 yuan, after ex-factory jet fuel price rose by 800 yuan per ton to 7,640 yuan.
The ex-factory price will be based on the after-tax import costs for the fuel plus a premium, and the premium will be adjusted once a year in negotiations between buyers and suppliers taking into account demand, freight, transaction volume and global crude price, the National Development and Reform Commission said on its website yesterday.
The new price will take effect on the first day of each month, it said.
"The reformed pricing mechanism marks a big step toward a market-oriented system, and also serves as an experiment for reforming China's refined fuel market," the NDRC said.
China had previously adjusted its ex-factory jet fuel price at the same frequency as those for retail gasoline and diesel, which are priced based on the cost of a basket of crude.
Under the mechanism introduced in late 2008, the NDRC can revise gasoline and diesel prices when prices of key global crude oil in the basket change more than 4 percent over 22 working days. In early June, the State Council approved a proposal by the NDRC for a quicker reform of the pricing mechanisms for oil, natural gas, water and electricity.
"Domestic gasoline and diesel prices are expected to be more market-oriented following the adjustment of ex-factory jet fuel prices although the reform won't happen too soon," said energy expert Lin Boqiang. But Lin said the monthly adjustment of ex-factory jet fuel price "will lead to more frequent adjustments in jet fuel surcharges."
Chinese carriers raised fuel fees on domestic routes longer than 800 kilometers to 140 yuan (US$22) from 90 yuan in May and those on shorter routes to 80 yuan from 60 yuan, after ex-factory jet fuel price rose by 800 yuan per ton to 7,640 yuan.
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