The Office of the National Energy Leading Group announced on Monday a draft of the upcoming energy law in order to seek public opinions through the media and the Internet. The new law is expected to establish a pricing system based on market relations within the scope of governmental control.

The draft states that the government would establish a pricing system "following principles that reflect supply and demand, energy efficiency and incorporate environmental costs". If passed, the government would relax price controls for energy products connected to consumers' lifestyles, including refined oil products.

"The draft signifies that the energy pricing system reform will be affirmed by law," said Lin Boqiang, Director of the China Center for Energy Economics Research in Xiamen University. He added that although there were few technical concerns over the pricing system, it was hard to predict when the law would be passed and implemented.

Additionally, the draft stipulates that transportation prices for industries controlling natural resources and the service prices for important products covering public interests would be controlled by the government. The government would foster and regulate the energy market, encourage all kinds of venture capitalists to invest in energy exploitation and gradually introduce a pricing system that would be conducive to lower cost, higher efficiency, resource saving and have less impact on the environment.

According to energy experts, the upcoming law will be a fundamental directive covering energy resources but it would only provide general guidelines in the energy sector rather than specific details.

There have been rumors circulating about establishing a specific ministry to coordinate energy management. The second chapter of the draft deliberates on the issue of comprehensive energy management but it doesn't mention forming a new ministry.

According to the draft, energy authorities under the State Council would coordinate national energy management policy, while other relevant departments would be in charge of all other pertinent energy issues within their jurisdiction.

China will establish an energy reserve system to cope with the critical energy conservation situation that threatens the country's energy security, notes the draft.

Regarding environmental concerns, the draft suggests that enterprises which over-exploit energy resources would face a fine up to five times their illegal gains.
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The 34-page energy law draft comprises 15 chapters and 140 articles. Sources revealed that the original plan intended that the draft would be submitted to the State Council by the end of this year and then the National People's Congress next year for discussion.

This is the fifth edition of the energy law. Formal requests for public opinions end on February 1, 2008.

Ye Rongsi, the deputy head of the team responsible for drafting the law, said that the earliest possible date for China's Energy Law to go into effect would be 2009.

(China.org.cn by Huang Shan, December 4, 2007)