authorities. Gas price is composed of ex-plant
price, city-gate price
14 and end-user price.
15
Ex-plant price, trunk pipeline transmission tariff
and city-gate benchmark price are set by the
NDRC. The local pipeline gas distribution fee is
set by the provincial government’s pricing
authorities, as is the urban end-user price.
Gas price deregulation in China has been
making steady progress since the 18th National
Congress of the Communist Party of China in
2012. Following the principle of “maintaining
the administration of pipeline transmission tariffs
in a natural monopoly and deregulating gas
sources and prices”, a complete price regulatory
system covering the natural gas value chain from
trans-provincial long-distance pipelines and
provincial short-distance pipelines to city/town
gas distribution pipelines has been established.
The non-residential gas price was fully
reformed, step by step, through pilot implementation in selected regions. The three steps of gas
price deregulation were completed during the
12th Five-Year Plan (2011–15). Pilots for gas
pricing mechanism reform were first carried out
in 2011 in Guangdong and Guangxi. Measures
included shifting gas price management from
factory to city-gate, capping the maximum price,
changing the pricing method from cost-plus to
netback, and building a dynamic adjustment
mechanism linking gas price to the price of fuel
oil, liquefied petroleum gas and other alternative
energy sources. The new gas pricing mechanism,
based on the knowledge gained from the two
pilots in Guangdong and Guangxi, was introduced nationwide in 2013. The price of stock gas
and incremental gas was adjusted separately. The
price of incremental gas was first linked to the
price of alternative energy. Then the price of
stock gas was linked to the price of alternative
energy in three steps. At the beginning of 2015,
the price of stock gas and incremental gas was
loosely tied to conditions in domestic and
overseas markets. In this way, the non-residential
gas price was fully reformed.
The residential gas price has been gradually
adjusted. In order to take people’s well-being
into account, China used a dual pricing system
for residential and non-residential city-gate gas
prices. The residential city-gate price had not
been adjusted since 2010, which meant that the
average residential city-gate gas price was about
20% lower than the non-residential price. With
changing domestic and international markets,
deepening reform of non-residential gas prices
and inconsistent pricing mechanisms for residential and non-residential gas, the gas price
became increasingly difficult to manage and was
a constraint on gas supply security. To address
the residential and non-residential city-gate gas
dual pricing system, the NDRC released the
Circular on Adjusting Residential City-Gate Gas
Price in May 2018. This changed the ceiling
price administration system into a benchmark
price administration system. It stated that the
residential gas price should be linked to the
non-residential city-gate gas benchmark price,
and that the supplier and buyer should be
allowed to negotiate a city-gate price that is no
more than 120% of the base level (with no lower
limit). Given the difference between residential
and non-residential gas prices in some provinces,
the national pricing authority allows them to
reform residential gas price stepwise. The price
increase in residential gas price may not exceed
RMB 0.35 per cubic metre in 2018, and the
remaining price difference should be adjusted
a year later. At this point, residential and
non-residential gas are linked by both the pricing
mechanism and price level, and the price of gas
in competitive parts of the value chain is decided
by the market.
The price of shale gas, coalbed methane,
coal-to-gas and other types of unconventional
gas were deregulated and allowed to fluctuate in
2013, as was the price of liquefied natural gas in
September 2014 and the price of gas supplied
directly to users (except fertiliser companies) in
April 2015. The price of gas used for chemical
fertilisers, and the gas storage purchase, sale and
service price were deregulated one by one in
14
City-gate price = ex-plant price + pipeline transmission
tariff.
15
End-user price = city-gate price + local pipeline gas
distribution fee.
456
S. Yaodong and A. Gillespie
price, city-gate price
14 and end-user price.
15
Ex-plant price, trunk pipeline transmission tariff
and city-gate benchmark price are set by the
NDRC. The local pipeline gas distribution fee is
set by the provincial government’s pricing
authorities, as is the urban end-user price.
Gas price deregulation in China has been
making steady progress since the 18th National
Congress of the Communist Party of China in
2012. Following the principle of “maintaining
the administration of pipeline transmission tariffs
in a natural monopoly and deregulating gas
sources and prices”, a complete price regulatory
system covering the natural gas value chain from
trans-provincial long-distance pipelines and
provincial short-distance pipelines to city/town
gas distribution pipelines has been established.
The non-residential gas price was fully
reformed, step by step, through pilot implementation in selected regions. The three steps of gas
price deregulation were completed during the
12th Five-Year Plan (2011–15). Pilots for gas
pricing mechanism reform were first carried out
in 2011 in Guangdong and Guangxi. Measures
included shifting gas price management from
factory to city-gate, capping the maximum price,
changing the pricing method from cost-plus to
netback, and building a dynamic adjustment
mechanism linking gas price to the price of fuel
oil, liquefied petroleum gas and other alternative
energy sources. The new gas pricing mechanism,
based on the knowledge gained from the two
pilots in Guangdong and Guangxi, was introduced nationwide in 2013. The price of stock gas
and incremental gas was adjusted separately. The
price of incremental gas was first linked to the
price of alternative energy. Then the price of
stock gas was linked to the price of alternative
energy in three steps. At the beginning of 2015,
the price of stock gas and incremental gas was
loosely tied to conditions in domestic and
overseas markets. In this way, the non-residential
gas price was fully reformed.
The residential gas price has been gradually
adjusted. In order to take people’s well-being
into account, China used a dual pricing system
for residential and non-residential city-gate gas
prices. The residential city-gate price had not
been adjusted since 2010, which meant that the
average residential city-gate gas price was about
20% lower than the non-residential price. With
changing domestic and international markets,
deepening reform of non-residential gas prices
and inconsistent pricing mechanisms for residential and non-residential gas, the gas price
became increasingly difficult to manage and was
a constraint on gas supply security. To address
the residential and non-residential city-gate gas
dual pricing system, the NDRC released the
Circular on Adjusting Residential City-Gate Gas
Price in May 2018. This changed the ceiling
price administration system into a benchmark
price administration system. It stated that the
residential gas price should be linked to the
non-residential city-gate gas benchmark price,
and that the supplier and buyer should be
allowed to negotiate a city-gate price that is no
more than 120% of the base level (with no lower
limit). Given the difference between residential
and non-residential gas prices in some provinces,
the national pricing authority allows them to
reform residential gas price stepwise. The price
increase in residential gas price may not exceed
RMB 0.35 per cubic metre in 2018, and the
remaining price difference should be adjusted
a year later. At this point, residential and
non-residential gas are linked by both the pricing
mechanism and price level, and the price of gas
in competitive parts of the value chain is decided
by the market.
The price of shale gas, coalbed methane,
coal-to-gas and other types of unconventional
gas were deregulated and allowed to fluctuate in
2013, as was the price of liquefied natural gas in
September 2014 and the price of gas supplied
directly to users (except fertiliser companies) in
April 2015. The price of gas used for chemical
fertilisers, and the gas storage purchase, sale and
service price were deregulated one by one in
14
City-gate price = ex-plant price + pipeline transmission
tariff.
15
End-user price = city-gate price + local pipeline gas
distribution fee.
456
S. Yaodong and A. Gillespie