China: Tax Rebate & Fuel Subsidies Issue to Affect Sinopec
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Friday, 04 July 2008 |
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Sinopec Group has denied this week that the government would stop
subsidizing the company or cancel import tax rebates, local media
reported.
China has been subsidizing Sinopec and the China National Petroleum
Corporation (CNPC), the country's largest oil producer, to cushion them
from soaring world crude prices, as refined oil is sold at
state-capped, below-cost prices nationwide.
The government mentioned policies would be adjusted once fuel prices
were straightened, but the recent increases had only lessened the
distortion instead of removing it completely, the official said.
On June 20, China raised the benchmark retail price of fuel and diesel
by 16 percent and 18 percent respectively. Following the adjustment,
Sinopec now sells fuel in Beijing at 7.19 yuan (1.04 U.S. dollars) per
liter for the highest grade of 98# petrol, still about half of that in
Hong Kong.
Counting all the subsidies and price adjustment, Sinopec was still
losing 900 yuan for refining each tonne of oil, according to the
source. In April, Sinopec received 7.1 billion yuan in subsidies in
April. This followed 5 billion yuan in 2006, 4.9 billion yuan in 2007
and 7.4 billion yuan in the first quarter this year.
The company also received 2.51 billion yuan in refunded value-added
taxes on imported gas and diesel from April to June, according to the
Ministry of Finance. The tax rebates, however, may be changing this
month.
PetrolWorld 040708
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