Subsidies for groups hit by fuel price rise

PUBLISHED : Friday, 02 November, 2007, 12:00am
UPDATED : Friday, 02 November, 2007, 12:00am

Ministry sets aside funds for sectors including fishing, timber and transport

The Ministry of Finance announced yesterday it would issue special subsidies to the low-income groups and industries hit hard by fuel cost increases, a day after the nation's planning agency increased oil prices by about 10 per cent and warned of an imminent rise in gas prices.

The National Development and Reform Commission raised the price of petrol, diesel oil and jet fuel by an average 500 yuan per tonne.

The ministry said the central government had transferred funds to local governments and departments for special subsidies for groups likely to suffer most from the increase.

The sectors included low-income groups, urban public transport, rural passenger services, and the fishing, timber and taxi industries.

The ministry also ordered local governments to subsidise low-income families and student canteens affected by the higher cost of gas. The government has already provided similar financial support to grain growers, according to a statement on the ministry's website.

It appears the message is aimed at offsetting potential social discontent and inflation from costlier fuel.

Beijing cab driver Shi Liang said that eight out of every 10 conversations he had with customers yesterday were about oil prices.

'I still remember how the price rise last year paralysed the city.'

Beijing taxi drivers staged a two-day strike in protest against slumping business stemming from a fare increase in July last year, when the government, instead of giving subsidies, passed petrol price rises on to passengers, resulting in a drop in customers.

'If they use the same old tactic, we will strike again,' he said.

The price increase of more than 0.4 yuan per litre of petrol will add 300 yuan to Mr Shi's monthly bills, reducing his income by about 10 per cent.

Shanghai motorists complained of similar cuts into their earnings and problems filling their tanks.

Taxi driver Yang Yongbin said he would have to spend an extra 300 yuan per month on fuel, while a coach driver operating between Shanghai and Yancheng, in Jiangsu province, complained that many stations were rationing.

'I want to fill up with 800 yuan of diesel for a long drive, but the station only allows me to put in 200 yuan each time,' the driver said. 'Some stations are only allowing drivers to buy 50 yuan at a time.'

In Shenzhen, motorists tuned in to radio station traffic broadcasts for reports on fuel sources because cheap fuel such as the popular No93 type was sold out at many stations.

But some drivers accused petrol stations of hoarding fuel because they knew the authorities would allow them to charge more for it.

'I know they had fuel [on Wednesday], but just didn't want to sell it,' Shenzhen motorist Wen Chang said.

Farmers are also feeling the pressure of petrol price rises.

In Jilin province, one of the mainland's biggest food production areas, the director of Siping's Gujiazi grain storehouse, Zheng Diansheng , said agricultural production was more vulnerable to fuel price rises because of the increasing dependence on machinery.

'More and more crops, especially corn, rely on diesel-driven machines from sowing, to ploughing to harvesting,' Mr Zheng said.

'The cost of transporting produce from the fields to processors and from there to customers will immediately rise. Last year, transport fees doubled to 40 yuan per tonne. Any further increase will break the backs of the farmers.'

Operating costs are expected to rise for cross-border truck drivers who have to pay 10 per cent more at the pump, Container Transport Employees' General Union vice-chairman Tse Long said.

'The price of diesel has increased around 50 fen per litre. That means our fuel costs have increased from 20 per cent to 22 per cent of overall costs, and many cargo owners are unwilling to bear the rising cost,' Mr Tse said. 'The increase will exacerbate the recession in the logistics industry as more and more cargo owners shift from Hong Kong to Shenzhen's Yantian port.'

He said cost increases had resulted in a 10 per cent decline in the number of trucks shuttling between Hong Kong and Guangdong since 1997.

Container Truck Owners' Association chairman Ricky Wong Kei said he was worried about his members' livelihoods.

'We have to refuel on the mainland because it's impossible for us to refuel in Hong Kong as the price gap is still large,' Mr Wong said. 'But if fuel prices keep rising, we will surely lose our jobs one day.'

Mainlanders may also have to contend with an inflation crisis.

Prices of grain, vegetables, meat and non-essential foods soared in the first three quarters of the year. In Guangzhou, the price of the Southern Metropolis News went up from 1 yuan to 2 yuan from yesterday.

Retired Guangzhou military cadre Xie Xiaoli said she and her husband had been forced to scrimp all year.

'My pension is 2,000 yuan now because it was raised 151 yuan last month. But food prices have more than doubled over the past 10 months. So we can only afford vegetables every day and a dish of meat on Sunday.'

Chen Li, a car owner in Guangzhou, said the price rise was unwelcome, but unlikely to affect his standard of living.

'The price increase will cost me no more than 50 yuan ... half the price of a film ticket.'

Out of control

Government's target is to rein in the inflation rate for this year at 3%.

The CPI's rise year on year in September was 6.2%