China planner says Jan 1 good date for fuel reform

Jan. 1 would be a good date to implement reforms of China's fuel taxation and pricing system, a top Chinese economic planning official said on Thursday.
 
"I personally think Jan. 1 is a good time," Zhang Xiaoqiang, deputy head of the National Development and Reform Commission, told reporters.
 
Zhang said details of the planned reform would be made public within a few days.
 
The reform plan is expected to encompass a partial liberalisation of prices and a landmark tax change which will see taxes siphoned off at the pump for the first time. But the government has kept motorists and refiners on tenterhooks with a promise to consult the public before going ahead with the reform.
 
"We desperately want to know how things are going to look after the reform. For now there hasn't been much change in activity because people don't have any idea what's going to happen with the new pricing and tax," an official at one Chinese refinery told Reuters earlier this week.
 
The reforms aim to loosen China's rigid state controls on fuel prices which often left refiners in the red in the past.
 
China hasn't adjusted its pump prices since June, and crude oil prices have collapsed. That means refiners are sitting on huge profit margins but motorists are furious at having to pay 50 percent more than American drivers.
 
An official source familiar with the reform plan told Reuters last week that the proposal would allow prices to fluctuate, within limits, provided crude oil remained below $130 per barrel. Refiners would supply a freer market, with the state playing a much reduced role unless prices threatened to heat up again.
 
In principle, prices should reflect the scarcity of resources, the supply and demand balance and the environmental and ecological costs of producing the fuel, which China's current oil product prices do not do adequately, Zhang said.
 
He said it made sense to start the new system on Jan. 1, since the tax reform aims to replace road tolls, which are levied from the start of the year.
 
"Now is a good time. I hope China can implement the reform draft as soon as possible after soliciting public opinion."
From: Reuters

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