It has been quite evident that the domestic product oil is sold at a price lower than the purchasing price of international crude oil since the beginning of this year, which involves the interests of all sectors in the society, said Zhao Xiaoping, director of the pricing department of the National Development and Reform Commission (NDRC) in Beijing on Friday. China will reform its oil pricing mechanism by making the prices of its processed oil more flexible to reflect the oil supply, demand and price fluctuation in both domestic and overseas markets, according to the International Finance News on October 31.

On October 28, the NDRC convened a symposium here discussing the price reform of energy and resources, and the reform of product oil and the readjustment of resource taxes became hot topics at the seminar.

At the present, China sets the price of processed oil in reference to the average price of oil products in the Singapore, Rotterdam and New York markets. However, as the government only adjusts the price of oil products when the international price changes enough, the final price is late for at least about one month.

Speaking of the reform of the processed oil products, Zhao Xiaoping said, in the processed oil pricing mechanism, the calculation methods for the final pricing will be improved and the external price references for product oils will be readjusted so as to flexibly reflect supply, demand and price conditions on domestic and foreign markets and to help crack down on domestic oil speculation.

Zhao Xiaoping added, to solve the problem of product oil supply, the distribution of benefits among the oil industry should be adjusted through financial and taxation means while pushing ahead the pricing reform, and the extra income obtained by oil enterprises in price hikes will be modulated. In addition, the price interlocking mechanism of oil and its related industries will be established, and oil subsidies will be given to weak industries and mass groups.

Zhao Xiaoping also pointed out that there exist play-up and speculation factors for the present oil price in international market. So the pricing mechanism should be used to avoid the shift of the abnormal fluctuation on international market price to the home market. Otherwise, the changes of international oil price will exert more impact on the stable operation of the home market.

"Energy and resource taxation policy will be readjusted to improve their taxation standards so as to guarantee the reasonable earnings of the state as the resource owner and avoid the excessive shift of social income to some enterprises'', said Ma Kai, Chairman of the NDRC.

Finance and taxation policy is one of the important supporting measures for the resource price reform. Ma Kai said, a research will be made on changing the resource taxation tax from quantity-based levy to price-based taxation, or levy according to the resource quantity owned. Levy standards, involving environmental protection taxes, will be raised to make resource prices reflect the resource damages and the cost of environment treatment.

Ma Kai disclosed that the state will choose an appropriate time to put forward an oil tax policy in order to boost oil saving and embody the principle of "the more oil consumed, the more taxes'' At the same time, taxation policy will be used to rationally control exports of resource products.

Five reforms concerning China's resource prices

1. Push forward water price reform in an all-round way. The levy scope for water resources will be enlarged and levy standards raised. The water pricing system will be farmer-oriented and the water price for agricultural purpose will be gradually raised and sewage treatment fees levied in an all-round way.

2. Actively carry forward the electricity price reform. Gradually establish a market-oriented system by which electricity generation and sales prices will be decided through market competition and electricity transmission and distribution prices fixed by the government.

3. Improve the pricing mechanism for petroleum and natural gas.

4. Realize overall market-driven pricing of coal.

5. Improve land price-fixing mechanism. All areas in the country will have unified standards for lowest price of contractual land leasing, and illegal lowering of land prices to attract investments will be banned.

By People's Daily Online