November 23, 2010 / 10:12 AM / 9 years ago

China punishes firms for diesel price rigging

BEIJING, Nov 23 (Reuters) - China on Tuesday ordered authorities to seize revenues from some local oil refineries and wholesale fuel dealers for artificially propping up diesel prices, part of an effort to control prices and fight a diesel supply crunch.

The powerful National Development & Reform Commission (NDRC) said on its website (www.ndrc.gov.cn) that oil dealers including some affiliated to state oil firms were selling diesel above the state-set ceilings, causing disarray in the market.

The agency ordered local authorities to seize the illicit revenues from the above-ceiling sales and also fine them with up to 5 times their income.

A counter-seasonal diesel shortage started in October, partly because local governments ordered power cuts to small industries to reach their energy-saving targets, forcing factories to fire up stand-alone diesel generators to maintain operations.

Some oil dealers and local refineries took advantage of the supply squeeze and marked up diesel prices by up to 10 percent above the government-set retail ceilings, industry officials have said.

To ease the shortage, state firms PetroChina and Sinopec Corp have raised their refinery throughput to record rates since November and also returned to the international market for diesel imports for the first time in two years. [ID:nTOE6AI07A]

(Reporting by Chen Aizhu; Editing by Ed Lane)

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