January 26, 2018 / 2:57 AM / a year ago

China plans crackdown on oil refiners' unofficial capacity growth

BEIJING (Reuters) - China’s state planner said on Friday it will launch a fresh crackdown on oil refiners that expand capacity without official approval, the latest sweeping move by Beijing to curb unfettered growth in fuel output and illicit oil trade.

In a statement, the National Development & Reform Commission (NDRC) said it will close refineries with less than 2 million tonnes per year (40,000 barrels per day) of capacity if they are found to violate regulations.

The penalty for larger refineries will be to curb any expansion projects.

In general, there is illegal behaviour in capacity building, safety, environmental protection and taxation, the NDRC said.

Even so, China’s refineries have been churning out and exporting bumper volumes of diesel and gasoline, in a race for profits.

The move comes after the government roiled small chemical plants that sell fuel by cracking down on illegal fuel sellers and introduced environmental controls last summer.

This year, Beijing will introduce new tax rules that come into effect on March 1 to close loopholes that allegedly allowed independent refiners and fuel blending companies to sell fuel without paying consumption taxes.

Reporting by Josephine Mason and Beijing news monitoring desk; Editing by Michael Perry and Tom Hogue

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