China's state planner for the first time urged natural gas suppliers and distributors to implement off-season prices earlier for industrial and commercial users, to help mitigate companies' losses from the coronavirus outbreak.
Off-season natural gas prices are typically implemented from mid-March or early April until mid-November in China.
CR Gas, a subsidiary of state-owned China Resources, will begin off-season prices from Feb.1 for its over 18,000 industrial users and 218,000 commercial users, the state asset watchdog said in a statement on Monday.
"Price difference between peak and off-peak season could range from 20% to 40%, with some special gas sources such as unconventional gas being sold at even higher prices," said Wang Haohao, a gas analyst at Longzhong Information Group.
Under China's price mechanism, gas suppliers are allowed to raise prices by as much as 20% from benchmark city gate prices, set by local authorities, and there is no limit for off-peak season price reductions.
The state planner has asked local authorities to lower the city gate prices and encourage gas suppliers to provide cheaper prices for industries hit hard by the coronavirus outbreak such as fertiliser producers.
"Upstream gas suppliers would be affected the most by the policy, but not so much for midstream transmission companies and downstream distributors," said Wang.
Analysts at Bernstein expect revenue for the first quarter at PetroChina, the top gas supplier in the country, to decline at least 7 billion yuan ($996.4 million) as a result of lower city gas prices.
The National Development and Reform Commission on Saturday also cut the electricity prices for industrial and commercial users by 5% from Feb.1 to June 30.
State Grid and China Southern Power Grid, two state-owned electricity utility monopolies, will write-off around 48.9 billion yuan and 10.6 billion yuan power bills, respectively, the companies said.
(Reporting by Muyu Xu in Beijing and Jessica Jaganathan in Singapore; Editing by Sriraj Kalluvila)