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Domestic oil to move closer to international prices

By Fu Yu (China Daily)
Updated: 2008-11-28 17:13

Falling international oil prices have provided China an opportunity to reform its domestic fuel pricing system, an official has said to Shanghai Securities News.

Quoting an unnamed government source, the paper said the proposed reform would allow oil companies greater control on pricing of oil products in the domestic market.

It is known that the government is planning to publish its fuel price reform proposal for public comment. The source said that the proposal includes a provision that would allow domestic fuel prices to move in tandem with international prices when crude oil price is below $80 a barrel.

But the fluctuation in domestic fuel prices is limited to 800 yuan per ton within any one month, or no more than 1,600 yuan a ton in three months, the source said.

The government is also said to be considering an increase in the refined oil consumption tax, which will be renamed "fuel consumption tax". The tax increase is intended to replace the road and waterway tolls that are expected to be scrapped on Jan 1, 2009.