China to Gradually Open Jet Fuel Market

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Last updated at: (Beijing Time) Wednesday, October 30, 2002

China to Gradually Open Jet Fuel Market

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China will gradually open the jet fuel market and introduce competition into the sector in a move to help jet fuel suppliers cut costs and to reduce the jet fuel price while improving economic efficiency and service quality.

Jia Changbin, general manager of the recently-established China Aviation Oil Holding Company (CAOHC), said the jet fuel market will be opened at the same pace as the country's whole oil productmarket.

Jia said that qualified jet fuel suppliers would be allowed to contract with aviation companies and conduct jet fuel filling business through public bidding or negotiations. In addition, jet fuel supply facilities at airports will be made available to all qualified jet fuel suppliers, but under governmental supervision.

The establishment of the CAOHC is an important step in the reform of the country's jet fuel supply system. It will set up a shareholding company and put the core businesses of the original China Aviation Oil Supply Company (CAOSC) under its control, whileattracting as its shareholders three aviation groups -- the China Aviation Group, the China Eastern Aviation Group and the China Southern Aviation Group, and two oil companies -- the China Petroleum & Chemical Corp. (Sinopec) and the China National Petroleum Company (CNPC).

Reforming the jet fuel pricing system is also an important stepfor opening up China's jet fuel market. At present, the state is in charge of setting the price and fuel suppliers have no independent control over the price.

A market-oriented price system will be gradually established, said Hai Liancheng, deputy general manager of CAOHC.

He said that under such a price system, the same jet fuel supplier would be permitted to sell to different aviation companies with different prices and to the same aviation company with different prices in different airports.

The economic scale of the jet fuel supply market in China has not yet been determined. The annual jet fuel consumption at more than 100 airports totaled only about 5 million tons. The status for transporting jet fuel from north to south and from east to west has not been changed.

The CAOSC, established in February 1990, was uniquely in chargeof jet fuel purchasing, transportation, storage, quality inspection, marketing and filling in China. With the establishmentof the CAOHC, the governmental functions undertaken by the original CAOSC will be gradually taken over by the Civil Aviation Administration of China.

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