China announces first fuel price increase for the year

BEIJING (REUTERS) - China will raise the retail price ceiling for petrol and diesel from Monday in response to increases in global oil prices, the National Development and Reform Commission (NDRC) said on Sunday.

Petrol price will rise by 300 yuan (S$59.50) per tonne and diesel by 290 yuan per tonne, the NDRC planning agency said in a statement on its website, The announcement confirms an earlier report by energy consultancy C1 Energy.

The increases, the first this year, come after crude oil prices passed a trigger point at which the country can change fuel prices. Higher domestic fuel prices would be in line with recent rises in global oil prices, which have been propelled by signs of economic recovery in the United States and Europe, the planning agency said.

China last adjusted fuel prices on Nov 16, when it cut them by about 3 per cent in response to a fall in crude oil prices.

The authorities will order major state-owned oil companies to safeguard oil supplies to limit further price rises and continue to provide fuel subsidies for farmers, as well as the urban transport and fishery sectors.

Under the existing pricing formula, the government can raise fuel prices if a weighted 22-day moving average price for a basket of crudes - Brent, Dubai and Cinta - rises more than 4 per cent from when prices were last adjusted. Beijing has never disclosed detailed calculations, making it difficult to calculate the precise trigger point.

Industry sources earlier said the government may consider delaying a price rise because current fuel demand remains high as hundreds of millions of people travel home after the Chinese New Year holiday.

The government has previously indicated that it would change the types of crude oil in the pricing system, shorten the review period and narrow the trigger range under a revised scheme.

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