Lower natural gas prices in China starting next month are expected to result in a more rational pricing mechanism.
The cut, which takes effect on April 1, reflects falling global oil and natural gas prices.
It will address concern about a pricing scheme that has been blamed for depressed demand in the mainland, the Hong Kong Economic Journal reported Tuesday, citing Cheung Yip-sang, vice chairman of ENN Energy Holdings Ltd. (02688.HK).
The National Development and Reform Commission raised natural gas prices for non-residential users in July 2013 and September 2014.
Cheung said the second price hike was “irrationally high”, suppressing demand growth.
He said the increase benefited vested interests and ignored issues relating to environmental protection, energy infrastructure or economic growth.
Also, high valuations of natural gas projects have resulted in fewer mergers and acquisitions, he said.
Last year, five senior officials from the oil and gas industry were detained as part of a corruption investigation.
ENN Energy posted a 14.6 percent increase in sales to industrial and commercial users in the second half last year, down from 30.7 percent growth in the preceding six months.
This article appeared in the Hong Kong Economic Journal on March 31.
Translation by Vey Wong
[Chinese version 中文版]
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