China will lower gas prices Wednesday for the second time in a four weeks as world crude hovers around 40 dollars a barrel, state press reported Wednesday.
The government will cut its benchmark retail gasoline price by two percent and diesel prices will fall by 3.2 percent as of midnight Wednesday, Xinhua news agency reported.
The cut was the first since China implemented a new pricing mechanism for processed oil on January 1, and the second drop since December 19, the report said.
World oil prices were slightly higher in Asian trade Wednesday afternoon, with New York's main contract, light sweet crude for February delivery up 1.18 dollars to 38.96 dollars a barrel in afternoon trade.
Brent North Sea crude for February delivery added 13 cents to 44.96 dollars.
China implemented a new fuel tax system on January 1 that resulted in higher prices at the pump and allowed the government to adjust subsidies to state-run refiners.
The two price cuts are seen as aimed at helping consumers absorb the fuel tax which increased gas prices at the pump by 1.0 yuan (14 cents) per litre.
With the latest cut, prices are now expected to fall below five yuan per litre for 93 octane gas, the Beijing Morning Post said.
The fuel tax is geared to allow domestic prices to move in line with the global market, ending years of troublesome price-setting by the government that has brought losses to listed state refiners such as PetroChina and Sinopec.
The government in the past has had to issue generous subsidies to refiners to keep them operating and delivering fuel to consumers.
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