China to cut city-gate natural gas prices and pipeline fees from April 1

China will implement its previously announced cuts to value added tax on natural gas, by lowering city-gate natural gas prices and pipeline transportation fees from April 1, according to notices posted on the website of National Development and Reform Commission Friday. 

The cuts should marginally lower gas prices for end-users, but are unlikely to have a major impact on demand -- either in the residential or non-residential sectors -- or on pipeline imports and LNG, as margins for gas distributors will not change significantly. 
The NDRC, which regulates China's domestic energy prices, said the city-gate price for natural gas will be cut by yuan 0.01-0.02/cu m from April 1, when VAT on natural gas will be cut to 9% from 10%. 

It will also cut the natural gas pipeline transportation fee for 13 interprovincial trunk pipelines, mainly operated by state-owned PetroChina, Sinopec and Datang Group, from April 1. 

The regulator has also asked each province to adjust the short-distance natural gas pipeline transportation fee according to the new VAT rate for natural gas as soon as possible. 

"I think we will have to lower the natural gas pipeline transportation fee soon according to the notice, though the adjustment should be tiny," a source at China Gas said Friday. 

In stimulus policies announced March 5, Beijing announced the VAT cut in sectors including manufacturing to 13% from 16%, and in transportation and construction to 9% from 10%.