RPT-China's fuel price schemes sent to cabinet-source

The National Development and Reform Commission (NDRC), the country’s top economic planner which set oil and gas prices, has said it is in the middle of revamping the fuel system to better reflect market cost, by possibly making the price changes more frequent.“The revamped fuel pricing scheme has been submitted to the State Council, waiting for approval,” the source said.“After the new pricing is implemented, refineries will be able to break even or even make small profit, reversing their current loss-making situation,” he said.Submission of a proposal to the Cabinet normally means the final approval is near.The new natural gas pricing system could allow domestic gas prices to be pegged to international oil prices, the source said, without giving further details.China’s gas imports have made up of more than 20 percent of domestic consumption in recent months, compared with none in early 2006.The government is facing mounting pressure to hike gas prices because the cost of at least half of the current imports, sourced from Turkmenistan, were reported to be linked to crude oil prices.China has begun to offer tax rebates for gas imports to help energy firms such as PetroChina trim losses as domestic gas sales prices were lower than the cost of imported gas.China now sets its retail fuel levels by tracking the prices of a basket of international crudes over a 22-working-day cycle. A price change is usually triggered when global oil prices move beyond a 4-percent range during this period.The government last cut retail ceiling prices for gasoline and diesel by about 3 percent from Sunday, taking prices off record highs at a time when headline inflation eased from a three-year peak.Since the fuel scheme started in January 2009, NDRC has raised retail fuel prices by about 50 percent, lagging the over 70-percent rally in the basket of crude prices, as it had to take account of domestic economic conditions which have been under inflationary pressure most of this year.