BIZCHINA> Review & Analysis
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BIZCHINA> Review & Analysis
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Monopoly SOEs' duty
(China Daily)
Updated: 2009-11-24 08:03 The juxtaposition of severe natural gas shortages in an increasing number of southwestern and central cities and louder pleas by providers for raising gas prices has led many to believe that the country's two monopoly gas providers, China Petrochemical Corporation (Sinopec) and China National Petroleum Corporation, are exerting pressure for a price rise. Both deny the suggestion and claim that part of the gas supply to the southern cities has to be diverted to northern cities that have been hit by unexpected snowstorms. Maybe they are right, but not exactly. Sinopec's pipeline to supply natural gas from Sichuan province to eastern provinces was originally expected to be completed by the end of this year, but price agreements are still to be signed with local gas retailers. Insiders from both the gas and oil giants reveal that gas companies are not keen on expanding production or developing new gas fields unless prices are raised to what they say are reasonable levels. Maybe the early snowstorms in the north have provided both giants with an opportunity to exert pressure on the National Development and Reform Commission for a rise in natural gas prices. The coincidence of a severe short supply of oil or electricity in some provinces and the request from monopoly providers for price rises in previous years remind people of similar ways State-owned enterprises (SOEs) use to press for price rise. That the rise in prices for power, oil or gas were always in the wake of such severe shortages is another sign that such short supply of gas may be part of the conspiracy by monopoly SOEs to pressure the central government for higher prices.
As is known, we hardly know the real cost of such products as gas, electricity and water because of a lack of transparency at these monopoly SOE providers. But they are not supposed to pursue too high a profit by making their products prohibitively expensive since they were founded by the State with money from taxpayers. They are given monopoly positions by the State for providing what private businesses cannot provide - services or products for reasonably inexpensive prices as a form of welfare. It is definitely wrong for them to use their privileged positions to seek as high a profit as possible like private firms without any regard for the social responsibility they have the obligation to shoulder. It is ridiculous for the government to lose control of the SOEs that should come to its aid when necessary. It is high time that an investigation is conducted into the shortage, and monopoly SOEs are regulated and supervised to operate the way they are supposed to. (For more biz stories, please visit Industries)
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