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Oil Product Market Opens Further

The government has approved 24 more companies to run the wholesale business of oil products. It is the first time in four years for the government to issue such licences.

This is another move for the government to open up the once-tightly controlled market to domestic players before it is completely exposed to foreign giants in 2006 under China's commitment to the World Trade Organization.

An official from the Ministry of Commerce said the licences were released in late September, and more wholesale licenses are expected to come out in following months.

The official, who is involved in supervising the business, indicated that some of the 24 companies are private companies, including the domestically listed Hubei Tianfa Group, which is an oil products trader.

Some others are affiliated with Sinopec and PetroChina, the nation's largest two oil companies.

The official declined to provide the names of the companies.

In a market overhaul in 1999, the government recalled thousands of wholesale licenses for refined oil products and consolidated the business into PetroChina and Sinopec. The government hopes the move could help the two companies get a better grip of the market and underpin the prices to sustain the revenues of their lumbering refineries that contribute the bulk of tax revenues to the government.

Experts said the market will not be reshuffled with the participation of the new players as PetroChina and Sinopec still control the most of the oil supply to wholesalers.

(China Daily January 12, 2004)

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