Latest Updates on Petrochemical Industry Stimulus Program       

The National Development and Reform Commission has initially approved the stimulus program targeting the petrochemical industry in principle, CCR has learned. The package aims to provide relief to the refining and chemical sectors which had posted huge losses, with measures including raising the trigger level of a windfall tax from oil price being US$40 a barrel to US$60 a barrel to ease oil firms' tax burden.
    "Structure adjustment and industry upgrade would be the highlights of the stimulus package, which will focus on supports to refining, ethylene and other petrochemical projects, as well as such agricultural chemicals like fertilizers and pesticides and high-end advanced materials," an expert with direct knowledge of the planning said.
    The plan would give subsidies to Sinopec Group and China National Petroleum Corp to compensate their refining losses made in 2008, he said.
    For fertilizer producers, the government will mainly give supports to key players on technology upgrade, in the face of oversupply of capacity in current domestic market.
    In addition, the draft plan includes more relief proposals for domestic oil firms, including changing the way the consumption tax on refined oil products is charged, and increasing government purchase of refined fuel to deplete stockpiles held by companies.
   The plan needs to be reviewed by the State Council.
    "The petrochemical industry bailout package taps too many areas, so it may be unveiled later than the public had expected," a senior official involved in the plan drafting said.