CHINA had increased factory-gate natural gas prices for industrial and transport users by 0.4 yuan (US$0.540) per cubic meter, or by as much as a third in the worst-hit areas, a newspaper said yesterday.

The adjustment was effective from Saturday, but final prices varied across the country as provincial governments were allowed to adjust retail prices to reflect local conditions, a report in the China Securities Journal said, quoting unnamed sources.

The National Development and Reform Commission had sent out a notice about the change, which had been promised when fuel prices were hiked at the start of the month, the paper said.

There were no details of the increase on the commission’s Web site, and its spokesman could not immediately be reached.

The increase should be a boon for China’s big producers PetroChina and Sinopec, although domestic natural gas production still makes up a small portion of their overall operations.

In the southwestern city of Chongqing, gas prices for industrial users were up 0.424 yuan per cubic meter to 1.667 yuan, while in nearby Chengdu industrial firms had to pay 1.66 yuan per cubic meter, an extra 0.43 yuan, the report said.

However in Hubei Province, drivers who filled up with natural gas were paying about 3.35 yuan per cubic meter for the fuel.

China keeps a tight cap on energy prices, fearing they could fuel already-high inflation or domestic unrest. But below-market prices caused widespread diesel shortages and rationing in October, pushing the government to make a surprise 10 percent increase in fuel prices from Nov 1. It said then that gas prices needed adjustment but gave no further details of when the change might occur.(SD-Agencies)