China Giving Tax Rebates for Gas Imports

China is going to grant tax rebates for its rapidly growing imports of natural gas. The move is part of Beijing's strategy to boost use of the cleaner fuel.

According to the Ministry of Finance, the rebates will apply when import costs are above domestic wholesale prices. They will cover the period 2011 through 2020, as well as prior central Asian imports.

"There is not a significant amount of additional long-term LNG demand till around 2017. So you are only getting around three years of VAT reduction," said Beijing-based Gavin Thompson of energy consultancy Wood Mackenzie. "It's more about trimming losses on very high cost gas and it's a part of broader strategy towards bringing import prices closer to market prices in China."

The rebates apply to state-mandated import projects, including the central-Asia pipeline venture operated by PetroChina and LNG import terminals currently in use and those to be later approved by the state, according the ministry. Importers will receive rebates on a quarterly basis.