Chinese Mandarin - Oil industry a step closer to reform

BIZCHINA / Opinions

Oil industry a step closer to reform

By Wang Yu (China Daily)
Updated: 2007-04-03 14:33

Two new guidelines for wholesale oil product and crude licenses are set
to bring about de facto market deregulation. But analysts say reform of
the oil-pricing mechanism is crucial in terms of whether new players
enter the market.

"The two guidelines give maneuverability to the market regulations issued
by the Ministry of Commerce (MOFCOM) late last year, deregulating the
wholesale oil product industry. Previously, there were only general
principles for market deregulation, which were not operational," Niu Li,
a veteran economist with the State Information Center (SIC) affiliated to
China's top economic planner, the National Development and Reform
Commission, told China Daily.

The new requirements for private and foreign companies to get licenses
are appropriate, according to Niu. "My overall impression about the
guidelines and deregulation rules is that they are adequate to free up
the market while keeping enough control to ward off speculation," he said.

The Ministry of Commerce issued two guidelines recently on how domestic
and overseas companies can apply for wholesale crude and refined oil
licenses. The application review process takes 40 working days for
domestic private companies and four months for foreign firms.

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