The
State
Economic and Trade Commission, the watchdog for China’s
industrial policies, has decided to apply a correction to the
refined oil market by reducing the number of gas stations permitted
amid fears that over-construction of gas stations along with an
inefficient oil wholesale system will hinder oil trade’s
development.
“Refined oil is a critical product of national interest. A market
disturbance will hurt customers’ interests and hamper the economy’s
sustained development,” Zhang Zhigang, vice minister of the State
Economic and Trade Commission, said in a conference on regulating
the refined oil market.
Relevant watchdog departments have been ordered to make a careful
assessment of applications for new oil warehouses and gas stations.
But the orders fall short of stating any nationwide management
provisions to regulate the market.
Since 1999, over 500 gas stations have been established without
ratification from provincial economic and trade commissions, as
required. A lot of old stations privately have been rebuilt or
expanded, as well, so the number may well have climbed over 25,000
each with its own pricing, accounting and oil stocking, without the
benefit of overall economic direction. A modern chain system is
called for to unit and coordinate their operations.
The inefficient distribution in such an uncoordinated collection of
gas stations also drive costs up.
Over 2,500 oil wholesale enterprises, down from a previous 8,500,
are excessive according to modern refined oil distribution system
standards. Warehouses in these enterprises store oil in outmoded
equipment while outmatching the market’s capacity.
Zhang Zhigang said that the commission will improve rules on market
management and support gas station chain operations in ways that
include assisting Sinopec
(China Petroleum and Chemical Corporation) and CNPC (China
National Petroleum Corporation), the two monopolies that dominate
Chin’s oil market, find ways to remodel their gas outlets.
(CIIC 08/08/2001)