China warns transport firms after fuel price hike

BEIJING, Nov 3 (Reuters) - Transport companies must not take advantage of this week's 10-percent fuel price hike in China to raise their own prices excessively, the nation's top economic planning body said on Saturday, warning it was watching closely.

People would be encouraged to report illegal behaviour, such as price gouging and hoarding, which would be dealt with by the law, the powerful National Development and Reform Commission said on its Web site (www.ndrc.gov.cn).

"Following the price hike, everywhere must ... increase supervision, organise properly production and supply, and protect the basic stability of market prices," it said in a statement.

Companies not directly affected or affected only slightly by the hike must also not use it as an excuse to lift their prices, the commission added.

China announced the immediate 500 yuan ($67.08) per tonne increase in prices on Wednesday, and said it also planned to adjust "seriously low" natural gas prices for drivers and some industrial users in the near future.

The move will help balance the books of Asia's top refiner Sinopec (600028.SS), which has shouldered mounting losses by selling fuel at the regulated, below-market prices that Beijing maintains to avoid inflation and social unrest.

Officials hope the revenue rise will spur refiners to increase production and imports, heading off shortages that have caused queues, widespread rationing and at least one death, though the gap between local and global prices remains wide.

The commission also demanded companies guarantee fuel supplies to the market, especially of diesel, which had been in notable short supply.

It added that subsidies given to local governments to help poorer rural areas and low-income residents, must reach their intended targets as soon as possible. ($1=7.454 Yuan)