Chinese Cities Raise Gas Prices

Chinese Cities Raise Gas Prices
Chinese Cities Raise Gas Prices

Chinese cities have been raising residential gas prices in recent weeks, after Beijing launched a new mechanism linking retail residential gas prices with distributors' fuel purchasing costs, a reform long sought by utilities.
More than 20 cities, including Shijiazhuang and Handan in the north, Nanjing in the east and Mianyang in the southwest, have raised retail gas tariffs by 0.25 yuan ($0.0347) to 0.40 yuan per cubic meter, according to two industry officials and local government websites, Reuters reported.
That amounts to increases of about 13%-15%, based on Reuters calculations, and marks a breakthrough reform to link retail gas prices with the cost of the fuel.
China has in recent years taken steps to liberalize natural gas prices by allowing some cost pass-throughs in the commercial and industrial sectors, but has kept control of residential prices in what has been widely seen as an effort to avoid a consumer backlash.
The rigid pricing structure has at times squeezed distributors' margins and caused supply disruptions, especially in the winter heating season.
The price increases follow a policy guideline issued in early June by the National Development and Reform Commission economic planner, according to industry players, although NDRC did not make an announcement.

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