China Resources Gas to start off-season prices 2-months earlier to cushion virus hit

China Resources Gas

24/02/2020 03:54

BEIJING, Feb 24 (Reuters) - China Resources Gas Group
 1193.HK , the country's biggest city gas distributor, will
bring forward the implementation of off-season natural gas
prices by two months to February, following a rare instruction
from Beijing to support the virus-hit economy. 
    China's state planner for the first time urged natural gas
suppliers and distributors to implement off-season prices
earlier for industrial and commercial users, to help mitigate
companies' losses from the coronavirus outbreak.  urn:newsml:reuters.com:*:nB9N2A206Y
    Off-season natural gas prices are typically implemented from
mid-March or early April until mid-November in China.
    CR Gas, a subsidiary of state-owned China Resources, will
begin off-season prices from Feb.1 for its over 18,000
industrial users and 218,000 commercial users, the state asset
watchdog said in a statement on Monday.
    "Price difference between peak and off-peak season could
range from 20% to 40%, with some special gas sources such as
unconventional gas being sold at even higher prices," said Wang
Haohao, a gas analyst at Longzhong Information Group.
    Under China's price mechanism, gas suppliers are allowed to
raise prices by as much as 20% from benchmark city gate prices,
set by local authorities, and there is no limit for off-peak
season price reductions.
    The state planner has asked local authorities to lower the
city gate prices and encourage gas suppliers to provide cheaper
prices for industries hit hard by the coronavirus outbreak such
as fertiliser producers.
    "Upstream gas suppliers would be affected the most by the
policy, but not so much for midstream transmission companies and
downstream distributors," said Wang.
    Analysts at Bernstein expect revenue for the first quarter
at PetroChina  601857.SS , the top gas supplier in the country,
to decline at least 7 billion yuan ($996.4 million) as a result
of lower city gas prices.
    The National Development and Reform Commission on Saturday
also cut the electricity prices for industrial and commercial
users by 5% from Feb.1 to June 30. 
    State Grid  STGRD.UL  and China Southern Power Grid
 CNPOW.UL , two state-owned electricity utility monopolies, will
write-off around 48.9 billion yuan and 10.6 billion yuan power
bills, respectively, the companies said.
      

($1 = 7.0255 Chinese yuan renminbi)

 (Reporting by Muyu Xu in Beijing and Jessica Jaganathan in
Singapore; Editing by Sriraj Kalluvila)
 ((muyu.xu@thomsonreuters.com; +86 10 56692117;))