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UPDATE 1-China sets gas pipeline investment yield at 8 pct -state planner
October 12, 2016 / 9:26 AM / a year ago

UPDATE 1-China sets gas pipeline investment yield at 8 pct -state planner

(Adds details of the new regulation, comments from the NDRC)

BEIJING, Oct 12 (Reuters) - China’s National Development & Reform Commission (NDRC) said on Wednesday it will allow for a net 8 percent yield on investments in natural gas pipelines, part of an earlier pledge to lower transportation costs for the cleaner burning fuel.

The new yield, down from previous rates of 10 to 12 percent, applies to pipelines with a utilization of at least 75 percent, the state planning agency said.

Yields will be lower than 8 percent when utilization drops below 75 percent, it said.

In a Q&A published on its website, the NDRC said “downstream consumers have limited ability to carry the burden from operators asking for higher yield.”

The new regulation also confirms a previous proposal from the agency that introduced a new formula for transportation costs and a scheme to lower prices to boost natural gas consumption.

NDRC also said it plans to adjust natural gas pipeline transportation cost once every three years.

The new policy takes effect from Jan 1, 2017, it said.

The announcement of the new regulation comes two weeks after the NDRC said pipeline operators would be able to hike natural gas prices for bulk consumers by a maximum of 20 percent this winter as demand surges. (Reporting by Meng Meng, Chen Aizhu and Beijing monitoring team; Editing by Tom Hogue)

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