No new pricing system

He added that the government would not adopt the new pricing system in the foreseeable future.

"Although lower global oil prices will help pave the way for a new pricing system that is expected to track international crude prices more closely, the recent drop in (domestic) prices may not necessarily have been connected to that system," Han said.

Zhou Dadi, the retired former director of the Energy Research Institute, echoed his successor's comments.

"Even if a new pricing mechanism is adopted, State intervention in pricing will still apply in China, where the wholesale market is mainly controlled by Sinopec and CNPC," Zhou said.

The government adjusts oil prices only when the international price changes by more than 8 per cent. For refiners, this can lead to major losses as they pay large export bills when international crude prices are high, but cannot raise prices of the products they produce, such as gasoline for automobiles.

A gas station worker puts on new prices of gasoline on Sunday. China decided to cut the price of gasoline by 220 yuan (US$28) per ton as of January 14. [Xinhua]

According to news reports, the NDRC had earlier been considering de-linking the price peg between local oil products and oil products sold in Singapore, Rotterdam and New York, which had been the standard for the past five years.

Instead, the top economic planner was said to be weighing the possibility of linking the prices of local oil products to crude prices in Brent, Dubai and Minas, which would more accurately reflect prices in the global market.

1

2

3

(For more biz stories, please visit Industry Updates)