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China raises prices of oil, electricity

(Xinhua)
Updated: 2008-06-19 22:27

Drivers rush to refuel their cars before oil prices are hiked at midnight in Beijing June 19, 2008. China announced Thursday evening that gasoline and diesel prices would be hiked by about 18%. [asianewsphoto]

The commission also said the average electricity tariff will be raised by 2.5 cents per kwh starting from July 1, up 4.7 percent on average.

It said the price rise was made in response to rising costs of the country's power plants, including rising power-coal prices, increased costs on desulphuration facilities and investment in grid upgrading.

More than 80 percent of all the power generation companies suffered losses in the January-May period due to power-coal price rises.

Official statistics showed that power coal prices went up by more than 80 yuan per ton in the past two years. The prices had gone up by 60 yuan since the beginning of the year.

The commission also announced the country would exercise temporary price intervention on power coal as of December 31, and power coal prices are capped below the price on June 19.

The policy was adopted as the commission expected the power-coal price to rise further because of the gap between domestic and international prices and tight supplies.

The commission also said urban and rural residents and sectors of farming and fertilizer production, as well as the quake-hit provinces of Sichuan, Shaanxi and Gansu, will be exempt from the price rise.

Industrial and commercial undertakings, however, would only see limited impact, as power expenses usually account for a small portion of their total costs, it said.

"The price rise in electricity would not have a fundamental impact on the country's inflation rate," said the NDRC official.

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• Oil price increases unlikely to cause inflation