China to Increase Natural Gas Prices for Non-Residential Use

China will raise natural gas prices for non-residential users to reflect demand for and supply of the fuel and to conserve resources, the National Development and Reform Commission said today.

The average natural gas price will rise to 1.95 yuan a cubic meter from 1.69 yuan effective July 10, the NDRC said in a statement on its website today. Authorities will refrain from raising residential prices this time to avoid affecting the daily lives of the people, the commission said.

Today’s changes comes a month after China’s largest oil producer, China National Petroleum Corp., said the nation’s natural gas reform has entered a “good period” and the time was right to decide on a pricing mechanism for the resource. Premier Li Keqiang has encouraged the use of cleaner fuels such as natural gas and renewable energy to reduce reliance on coal and keep air pollution in check.

Natural gas import prices climbed 69 percent between 2010 and 2012, CNPC said on May 10, while average domestic gas retail prices in provincial cities gained only 24 percent in the five years to 2012. The resource currently accounts for 5.4 percent of China’s energy mix, the company said.

Higher prices will also encourage companies to increase natural gas imports and put more effort into exploration and extraction, the NDRC said in a separate statement on its website.

China will give subsidies to the taxi industry or raise fares to reduce the impact of the price adjustment, according to today’s statement. The government will also give Subsidies to gas-fired power companies and heat suppliers to offset higher costs, the NDRC said.

To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net

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