A new NDRC policy gives Chinese oil companies freedom to adjust refined oil prices by themselves.
The new regulations, from China's top economic planner the National Development and Reform Commission (NDRC will make it possible for Chinese oil firms to independently set refined oil prices in line with a government-set pricing formula.
From now on, Chinese oil companies will no longer have to wait for government notifications to change the price of oil, which the NDRC hopes will cut red-tape and allow Beijing to keep up with fluctuations in international crude prices.
Although the exact range for international crude oil price has yet to be specified, the new policy will allow companies to lower retail prices for gasoline and diesel when the conditions for a price reduction are met; choose not to raise at all; or increase retail prices by a lower level than previously allowed. However, the NDRC will still retain the right to the final retail price adjustment, in order to reduce the impact of high oil prices on the domestic economy.
Since 2009, Beijing had adopted a pricing system where it would adjust prices of refined products whenever the rolling 22-day average cost of crude rose or fell by at least 4%. The pricing cycle will now only take 10 days, instead of the previous 22, and the formula will also become more transparent, according the report issued by the NDRC.