CNPC and Sinopec seek autonomy in refined

　　The Economic Observer reported on June 4 that a series of information indicate that refined oil pricing mechanism which has been running for more than a year would be further adjusted. Reporters of our website were informed exclusively of the news that relevant departments including National Development and Reform Commission have concluded gains and losses of the new refined oil pricing mechanism. CNPC and China Petrochemical Corporation also put forward their specific proposals on how to improve and adjust refined oil pricing mechanism. They hope relevant departments should improve links such as tightening regulations on pricing mechanism and implementation.

　　Reporters have learned National Development and Reform Commission recognized new pricing mechanism’s positive influence on guaranteeing refined oil supply, increasing state revenue and enhancing profitability of oil refiners in the past period of implementation.

　　For the next step of adjustment, proposals put forward by the two groups such as gradually increasing corporate dominance of pricing mechanism, speeding up the adjustment frequency of refined oil, and lowering consumption tax on refined oil, have been recognized by relevant departments. Among the above proposals, how to tackle with lag of refined oil pricing mechanism and excessive transparency will be the top priority of the next stage of adjustment.

　　On May 20, Jiang Jiemin, chairman of CNPC said that the current oil pricing mechanism needs to improve, meanwhile the pricing mechanism is too transparent so Chinese government should in accordance with the mechanism when raises price. The Notice of National Development and Reform Commission’s Advice on Key Work of Deepening Economic Reforms in 2010 Transferred by State Council on May 31 also emphasized that this year will continue to improve the oil pricing mechanism.

　　Sources close to National Development and Reform Commission confirmed China Petrochemical Corporation and CNPC proposed to further speed up adjustment frequency of refined oil, let refined oil price close to market, lower oil volatility so that can prohibit a great deal of speculative behaviors along price adjustment and tackle with dispute of excessive transparency mechanism.

　　The two groups also suggested that corporations should be given of decision-making power under supervision of relevant departments when crude oil price is stabilized at a certain interval. As a result, it can increase corporate autonomy in the oil price adjustment.

　　According to the former management method, it is allowed to adjust domestic refined oil price when average price of crude oil fluctuates more than 4 percent for 22 consecutive working days on the international market. The sources said speeding up adjustment frequency so that it can reflect changes in international crude oil price much timely would become an important part of adjustment of the next step.

　　On June 1 National Development and Reform Commission announced to respectively reduce by 230 yuan per ton and 220 yuan per ton of gasoline price and diesel price starting at 0:00 of June 1 .After adjustment, gasoline and diesel prices per ton are respectively 7,190 yuan and 6,460 yuan. In fact, this adjustment didn’t strictly follow the regulation of allowing adjusting domestic refined oil price when average price of crude oil fluctuates more than 4 percent for 22 consecutive working days on the international market. According to statistics compiled by Shandong Zhuochuang Information Co., Ltd., change at three regions was negative 3.24 percent and figure from C1 Energy Ltd was also negative 3.24 percent.

　　Zhou Dadi, former head of National Development and Reform Commission Energy Research Institute told reporters that China’s current pricing mechanism basically can reflect changes in crude oil price as well as the signal can effectively adjust market supply and demand. However, the price adjustment range can be further reduced to reflect in order to reflect changes in fuel cost more timely.

　　The reporters also learned that work involves lowering collection of refined oil consumption tax from the production part to consumption part is advancing. This shift is beneficial to facilitate capital transfer of oil producers of the two major oil groups. Additionally, it can also help consumers better understand the refined oil consumption tax. (Translator: Qinghua Wade)

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