Taxi fares in Beijing will rise by 25 percent to offset an increase in fuel costs, local authorities said Friday.

The Chinese capital will raise taxi fares from 1.6 yuan (US$0.2) per km to 2 yuan (US$0.25) beginning Saturday.

Actually, some luxury taxis in the city have been charging 2 yuan, and a small number of outdated taxi cars charging 1.2 yuan will fade out.

The charge for the first three kms will remain the same at 10 yuan (US$1.25), the authorities said.

The price hike was decided following a public hearing held by the Beijing Municipal Reform and Development Committee on April 26, the authorities said.

Despite the rise of taxi fares, the Beijing municipal government will not raise the monthly rental fee of about 5,000 yuan which is paid by contracted cab drivers to taxi companies.

Meanwhile, a mechanism will be established in which taxi fares will be commensurate with the oil price, local authorities said.

According to the mechanism, when the oil price keeps rising, the government will take the following measures: firstly, to share the oil price rise between taxi companies and taxi drivers; secondly, to levy fuel surcharges; and thirdly, to raise taxi fares.

But when the oil price drops, the government will take reverse measures.

Currently, Beijing has about 66,000 taxis and nearly 100,000 cab drivers, government statistics show.

On May 11, China's largest city Shanghai raised taxi fares by 6.7 percent to offset the rising fuel costs, from 2 yuan per km to 2.1 yuan.

The charge for the first three kms was increased from 10 yuan to 11 yuan.

(Xinhua News Agency May 20, 2006)