BEIJING, Feb 11 (CEIS): Prices of energy products in China are possibly to rise across the board in 2006 when the government reforms energy products pricing mechanisms and reduces its intervention in their pricing.
In late 2005, the prices of quite a few energy products went up remarkably and this rising momentum is likely to continue in 2006.
On December 27, 2005, the National Development and Reform Commission made major adjustments to the pricing mechanisms for two major energy products - power coal and natural gas. The pricing of coal for electricity generation underwent a change from government intervention to independent negotiations between the supply side and the demand side, and a new forming mechanism for factory prices of natural gas came into being.
Coal accounts for two-thirds of China's total energy consumption at present. On expectation of large orders for coal after the Spring Festival, it seems sure that the price of coal will rise. In addition, the domestic price of finished oil is likely to go up, as China's demand for oil keeps increasing.
The factory price of natural gas is now guided by the government and is allowed to float within the given range according to the market demand-supply situation. As the price is to be adjusted according to the prices of crude oil, coal and other products.