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China denies fuel price controls to end
2008-05-22
China's government denied rumors Thursday it will ease price controls on gasoline and diesel that oil companies say are causing them huge losses and prompting fuel shortages. "The recent rumors that 'oil product prices will be de-controlled in early June' are groundless," the country's planning agency, the National Development and Reform Commission, said on its Web site. Beijing froze fuel prices last year to shield its public from surging global oil costs, barring refiners from passing on record-high crude costs to consumers. Refiners have tried to cut their losses by reducing output, leading to fuel shortages. Share prices of China's two biggest oil companies -- China National Petroleum Corp. and China Petroleum & Chemical Corp., or Sinopec -- rose Wednesday in Shanghai and Hong Kong as the rumor that price controls might end spread among investors. Sinopec, Asia's biggest refiner by volume, says its refining unit lost 13.7 billion yuan ($2 billion) in 2007 due to price controls. PetroChina says it also is losing money on refining but has not released details. Both companies are covering their losses out of higher profits on oil production, but say overall earnings have plunged. China is the world's second-biggest oil consumer after the United States, and its imports are growing by more than 10 percent a year. The price controls have hampered government efforts to promote conservation, and the country's fuel consumption is also rising more than 10 percent a year. Gasoline and diesel supplies ran short in October, disrupting trucking and causing long lines at filling stations in key export-driven areas of China's booming south. Beijing responded by ordering CNPC and Sinopec to fill the gap by importing diesel and gasoline. The government has promised to share the cost with the companies by giving them tax rebates and other aid. ____ On the Net: National Development and Reform Commission (in Chinese): http://www.ndrc.gov.cn
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