China has ended a slew of measures that were brought in last summer to fight domestic fuel shortages, resuming naphtha and gasoline export tax rebates and restoring import tariffs for diesel, industry officials said on Wednesday.
Although the moves should give refiners a bigger margin from international sales of naphtha and gasoline, Beijing has kept a quota system that helps guarantee domestic supplies by limiting how much fuel can be sold abroad.
China had suspended tax rebates - 11 percentage points of the 17 percent value-added tax charged on gasoline exports - from September 1 to December 31 to make it less profitable to export certain oil products. The moves came after pumps ran dry across south-east China.
"As there is no extension, it means the rebates have resumed," a finance ministry source told Reuters. "If there had been new measures we would have announced it before they began."
The official said the resumption had not been announced because the suspension had lapsed automatically, and rebates would continue at the same rates as in 2005.
The naphtha rebate was 13 percentage points of the 17 percent value added tax payable.
Refiners had responded to the measures in the fourth quarter by cutting back sharply on gasoline exports, but they have resumed robust overseas sales in January as domestic stocks now appear plentiful. A 6 percent tariff on imported diesel, waived in the last quarter of 2005 as harvest and heating needs stretched supplies, was also reinstated at the start of this year, a Beijing-based industry official said.
"There is no policy to extend the preferential policy into the new year. For January at least, Sinopec will have to pay for the import duty," said the official. Sinopec, China's largest refiner, is also its main importer of diesel.
Despite the import sweetener, China's diesel imports since the fourth quarter have been tepid due to an easing power shortage and top-throttle refinery production.
Chinese traders said they had not yet received any official word on the rebates, and said reinstating them would not mean Beijing was loosening its grip on fuel exports.
"Even with the resumption of the tax rebate, the government will maintain control over the total export amount to make sure the domestic market is adequately supplied," said a PetroChina trader.
For jet fuel, of which China imports a third of its consumption, the 9 percent tariff waiver on some fourth-quarter imports also expired with the start of 2006, said a Beijing-based official with monopoly jet fuel marketer, China Aviation Oil Supply Corp (CAOSC).
CAOSC received an ad-hoc duty waiver for 400,000 tonnes of imports made in late 2005 because top refiner Sinopec cut domestic jet fuel supply to boost production of more vital diesel.
Now that a normal level of domestic supply has been restored, the waiver has become irrelevant. This is because regular jet fuel imports are almost exclusively for international airlines, which are permanently exempt from tariffs.