China says it is acting based on international oil markets
While the Federal Government in Nigeria is making efforts to completely deregulate the downstream sector of the petroleum industry that will see an increase in pump price of petrol from the current (official) N97 to at least N141 per litre, the Chinese Government has for the fourth time this year reduced the price of petrol for its motorists.
Starting from Friday, Chinese motorists will pay a reduced price for petrol and diesel. In China, price for petrol per litre has been reduced by 0.22 yuan (N5.5) while the price per litre of diesel has been reduced by 0.26 yuan (N6.6).
The price reduction is the fourth in 2012.
The regulatory National Development and Reform Commission, NDRC, said on Thursday in a statement that the cuts followed a drop in the cost of crude oil in the international market which was affected by the presidential election in the United States and the slow recovery of the global economy.
“International oil prices have tumbled. WTI and Brent oil futures dropped to $85 a barrel and $105 a barrel, respectively, as of the start of November,” the NDRC said in a statement on its website.
The cut which takes effect on Friday represents a decrease of 3.2% for petrol and 3.4% for diesel on the ceiling benchmarks of CNY9, 640/tonne and CNY8, 820/tonne respectively.
As at Wednesday, the value of China’s crude basket had fallen by 4.36% since September 7.
Under the country’s oil-product pricing system, which started in 2008, domestic fuel prices may be adjusted when the moving average of the basket of international crudes change more than 4% over the 22-working-day period.
China imports nearly half of its oil requirements and the NDRC determines the price of the products based on international market forces.
The NDRC last adjusted petrol and diesel prices on September 11 this year, adding CNY550/ tonne and CNY540/tonne respectively, to reflect rising international oil prices.
China’s system is a bit different from Nigeria’s. Though prices are adjusted based on international price of crude, the government still determines how much petrol and diesel are sold to the citizens to avoid exploitation by fuel stations.
The Nigerian Government has said it needs to completely deregulate petrol to make it readily available. Diesel is already completely deregulated and marketers choose how much they want to sell to motorists.