THE government would refund value added tax on some diesel and gasoline imports made by the country’s top two oil firms between April 1 and June 30, the Finance Ministry said, a limited extension of a looser first-quarter program.

The tax rebate aims to encourage refiners to boost domestic supplies ahead of the summer Olympic Games, without forcing the government to raise low State-set fuel prices at a time when inflation is running at its highest level in over a decade.

Sinopec Group and China National Petroleum Corp. (CNPC) would get a refund of the 17 percent tax on 500,000 tons of gasoline imports each, the Ministry said in a statement dated April 8 but posted on its Web site yesterday.

Sinopec would get back the tax from 1.5 million tons of diesel shipments while CNPC would only get a free pass for 1 million tons, the notice said.

However, based on import rates during the first quarter, the allowances will likely cover the majority of shipments by the two firms, which are China’s only major importers. Independents fighting to secure a foothold have yet to make a serious impact.

With crude oil trading well above US$100 a barrel, the companies had petitioned the government to extend the rebate program to help them stem massive downstream losses.

Domestic refinery managers have said that with current domestic price levels they can only break even if they can buy crude for prices around US$60 to US$80, depending on their equipment. (SD-Agencies)