NDRC announces tiered gas pricing

The National Development and Reform Commission, China's top economic planner, issued guidelines on Friday that establish a three-tier pricing system for urban residential natural gas consumers.

The first and second levels are based on 80 percent and 95 percent, respectively, of the average monthly gas use in a fixed residential area.

The third tier is for households exceeding the gas use of the second level.

As a relatively clean and flexible fuel, natural gas will serve many social and economic goals. But increasing its use for urban heating and cooking requires price reform.

The government has given strong support to the natural gas industry, including higher prices. The benefits of these policies are still emerging, and demand forecasts vary widely.

Because various regions have different climates, heating supply facilities and distribution systems, local governments can set gas prices unilaterally. But the NDRC guidelines require all cities with gas supply systems to introduce tiered pricing by 2015.