Gov't moves to stabilize energy prices, ease inflation expectations

16:05, November 29, 2010      

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Thanks to successive measures taken by multiple departments to stabilize prices, the momentum for the nationwide rise in electricity and gas prices has temporarily been eased, and coal prices have been stabilized. The adjustments to refined oil prices will likely be postponed. Industry insiders said that the energy price stabilization has played a positive role in stabilizing the consumer price index (CPI).

The National Development and Reform Committee (NDRC) has successively released circulars requiring local agencies to stabilize prices. The goods and services with government pricing are primarily those that are closely associated with economic development and public welfare, including water, electricity, oil and gas.

The benchmark post-factory prices for domestically-made land natural gas were lifted by 230 yuan per cubic meter on June 1, 2010, sparking a series of planned natural gas price hikes in various regions.

Cities including Shenyang, Changsha, Hefei, Lanzhou and Beijing have held public hearings on planned gas price hikes. Given the inflationary pressure, the cities that had mulled over natural gas price hikes have put the emergency brake on the adjustments.

The NDRC had previously released a draft of the Guidelines on Introducing a Tiered Household Electricity Pricing System, which was open for public comment, in hopes of laying a foundation for raising the electricity price in the future. However, under the current inflationary pressure, there is very little likelihood of overall increases in electricity prices.

Song Zhichen, an energy analyst at China Investment Consulting Cooperation, believes that it has become impossible for China to raise the electricity price before the end of 2010.

The refined oil price, which has always been set by the central government, is faced with a conventional price adjustment, but insiders predicted that the adjustment will be stillborn because the NDRC, the Ministry of Commerce and other government agencies have recently issued a set of directives to stabilize consumer prices and increase the supply of commodities. Overall, the possibility of an adjustment to the refined oil price is remote.

Coal prices have been rising more slowly in the past two weeks, but its supply has not fallen. The coal output of China's top coal producers, such as Inner Mongolia and Shanxi Province, hit new highs in October, and their coal stocks increased accordingly.

By People's Daily Online


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