March 29, 2019 / 3:16 AM / 3 months ago

UPDATE 1-China to lower natural gas, power tariffs from April 1 after VAT cut

(Adds analyst comment on gas price impact)

BEIJING/SINGAPORE, March 29 (Reuters) - China will cut city-gate natural gas prices and trans-provincial natural gas pipeline tariffs from April 1, following value-added tax rate reductions, the state planner said on Friday.

It will also cut electricity tariffs for industrial and commercial use from April 1 as value-added tax for power grid firms will be lowered to 13 percent from 16 percent, the National Development and Reform Commission said in a statement on its website.

The real impact on natural gas prices will be limited as the government mandate comes as dominant state-run gas suppliers plan to raise their city-gate wholesale prices to end users to compensate steep losses in imports, said Chen Zhu, managing director with consultancy SIA Energy.

“The minor VAT-triggered price cut is almost irrelevant,” said Chen.

The VAT levy will be lowered to 9 percent versus previous 10 percent for city-gate gas prices, according to the NDRC statement.

The state planner also said the government aimed to lower the power tariff by 10 percent on average for the industrial and commercial users and has asked local authorities to work out detailed plans for price cuts for their regions.

Reporting by Beijing Monitoring Desk and Chen Aizhu; Editing by Rashmi Aich

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