China plans crackdown on oil refiners' unofficial capacity growth

China’s state planner said on Friday it will launch a fresh crackdown on oil refiners that expand capacity without official approval, the latest sweeping move by Beijing to curb unfettered growth in fuel output and illicit oil trade.

In a statement, China's National Development and Reform Commission (NDRC) said it will close refineries with less than 2 million tonnes per year (40,000 barrels per day) of capacity if they are found to violate regulations.

The penalty for larger refineries will be to curb any expansion projects.

In general, there is illegal behavior in capacity building, safety, environmental protection and taxation, the NDRC said.

Even so, China’s refineries have been churning out and exporting bumper volumes of diesel and gasoline, in a race for profits.

The move came after the government roiled small chemical plants that sell fuel by cracking down on illegal fuel sellers and introduced environmental controls last summer.

This year, Beijing will introduce new tax rules that come into effect on March 1 to close loopholes that allegedly allowed independent refiners and fuel blending companies to sell fuel without paying consumption taxes.

(REUTERS)