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Natural gas price hikes may spread

By Chen Yang (Global Times)

10:19, April 10, 2013

Tianjin held a public hearing on natural gas price adjustments Tuesday, raising suspicions that it will join Changchun in raising its natural gas price.

An official at the price department of the Tianjin Development and Reform Commission who did not give his name confirmed with the Global Times that the hearing had taken place, but did not provide details.

The municipality is considering raising the natural gas price for residents to 2.4 yuan (40 cents) per cubic meter from 2.2 yuan currently, local news portal reported Tuesday.

However, Nantong, a city in East China's Jiangsu Province, postponed a similar public hearing that was originally scheduled to be held Tuesday, the city's price bureau said in a statement Monday without specifying the reason. The city had previously planned to raise the natural gas price by 0.33 yuan to 2.53 yuan per cubic meter.

There are many online discussions about natural gas prices, and the government adopts a cautious attitude toward any price adjustment, reported Tuesday, citing an unnamed official from the bureau.

Changchun, capital of Northeast China's Jilin Province, has raised the city's natural gas price from 2 yuan per cubic meter to 2.8 yuan starting from April 1.

The price hike came after a statement from the National Development and Reform Commission (NDRC) on March 27, which denied rumors that China would increase natural gas prices significantly and said any adjustment to gas prices would go through public hearings before being implemented.

The Beijing-based daily newspaper China Business Times reported on March 25 that natural gas prices would be raised by some 30 percent to about 3.5 yuan per cubic meter in April, which caused panic buying in some cities.

A local official from Changchun said the natural gas price increase in the city was an individual case that did not contradict the recent NDRC statement, The Beijing News reported last week.

Question sent to the NDRC's press department went unanswered by press time Tuesday.

Analysts expect more cities to follow suit in raising natural gas prices.

"The NDRC raised the domestic gas price by 24.9 percent in May 2010, but many local authorities including Changchun did not immediately raise natural gas prices for residents, aware of what local residents can afford and for fear of boosting inflationary pressure," Lü Yin, an analyst at industry portal, told the Global Times Tuesday.

Lü expects China's natural gas price to continue rising over the next five years, as domestic consumption has been growing and the government is pushing for reforms of the natural gas pricing mechanism to make it more market-driven.

"The price hike will benefit natural gas distributors and producers including PetroChina, some of which suffered losses in past years," Ma Hui, an analyst at commodity consultancy Sublime China Information, said Tuesday.

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