Company officials say the reduction will not affect the 12 per cent return expected for the west-east project
The mainland government has revised its pricing mechanism for the PetroChina-led west-east natural-gas pipeline, cutting the indicative average price by 1.55 per cent.
State Development and Reform Commission deputy director Zhang Guobao said the revised average price of gas to be delivered by the US$5.2 billion, 3,900km pipeline was now 1.27 yuan (HK$1.18) per cubic metre, two fen lower than the previous guided price, according to Xinhua.
He said the figure was based on a well-head price of 48 fen per cubic metre and an average pipeline transportation cost of 79 fen, with the actual cost varying by distance from the gas source.
For residential customers, a transportation fee will also be charged by the local pipeline company on top of the city-gate price.
Mr Zhang said a three-category pricing scheme would be adopted, with residential city-gate prices at between 1.16 yuan and 1.46 yuan per cubic metre, industrial prices at 1.12 yuan to 1.30 yuan and power plant charges at 1.10 to 1.20 yuan.
Uncertainties on the outcome of the price negotiations and government policy with regard to the nascent gas industry are the main hurdles facing the pipeline project, which will compete against much cheaper coal as a fuel source.
