SINGAPORE/BEIJING : Policy reform in China will boost profit for city-gas distributors by letting them raise prices for residential sales above costs, after years of selling piped gas to households at a loss, according to utility officials and analysts. The scheme, which allows retail residential tariffs
SINGAPORE/BEIJING : Policy reform in China will boost profit for city-gas distributors by letting them raise prices for residential sales above costs, after years of selling piped gas to households at a loss, according to utility officials and analysts.
Regional piped gas distributors like Shanghai Gas, Chongqing Gas and Changchun Gas and other gas utilities suffered steep declines in profit or outright losses in 2022 as they were unable to pass on more of their costs to a sector accounting for over 20 per cent of China's gas consumption. The privately controlled firm, one of China's largest gas distributors with residential customers making up 36 per cent of its gas sales, expects the initial price hike this year to generate 3.2 billion yuan in gross margin, Tan said.
Since then more than 30 cities - including Qingdao and Nanjing in the east, Shijiangzhuang in the north and Lanzhou in the northwest - and the provinces of Hubei, Guizhou and Shaanxi have hiked residential tariffs by between 6 per cent and 20 per cent, according to local governments and utility sources.
China in recent years has liberalized natural gas prices by allowing distributors to pass costs on to industrial and commercial customers, although Beijing maintained tight control over household prices to avoid a consumer backlash.
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