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China decides to cut fuel prices from Friday
(Xinhua/Agencies)
Updated: 2008-12-18 18:40

China decides to cut fuel prices from Friday

A worker fills a car with gasoline at a gas station in Haikou, Hainan province, Dec 8, 2008. The long-awaited scheme on fuel taxation and oil pricing reform has been approved, the government said Thursday. [Asianewsphoto]

China has decided to slash fuel prices starting Friday, by 900 yuan ($131.7) per tonne for gas and 1,100 yuan per tonne for diesel, the National Development and Reform Commission (NDRC) said Thursday.

In the meantime, the benchmark prices for jet fuel would be lowered to 5,050 yuan per tonne, down 2,400 yuan from 7,450 yuan.

The commission explained that gasoline prices at the pump stations would be tuned down by 0.91 yuan per liter, from Friday, and diesel prices down by 1.08 yuan per liter.

It added that domestic fuel prices would remain unchanged on January 1, 2009, when the fuel tax is expected to kick in.

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The roughly 13 percent cut in gasoline prices and 17 percent reduction in diesel, plus a nearly one-third drop in jet fuel, were not unexpected after China announced last month that it would move ahead with a long-stalled effort to allow its domestic prices to fluctuate in line with the global market.

The NDRC also announced on Thursday that it had passed the package of reforms, which include a significant increase in consumption taxes. It said the new prices had been set factoring in the higher tax rate.

The country will annul six types of fees on road maintenance and management, and at the same time raise the gasoline consumption tax from the current 0.2 yuan each liter to one yuan per liter and diesel consumption tax from 0.1 yuan per liter to 0.8 yuan one liter, according to the approved scheme, which will come into effect on January 1, 2009.

Oil prices, which fell sharply in June on fears that higher prices might temper China's consumption, were little changed after Thursday's news, stuck near an over four-year low around $40 a barrel after OPEC's biggest ever production cut failed to offset deepening gloom over shrinking global demand.

The deeper cut in diesel prices will aid farmers ahead of the spring harvest while Chinese airlines such as flagship Air China will get relief from the 32 percent cut in jet fuel costs, which had been allowed to rise much more swiftly than motor fuel prices earlier in the year.


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