Energy

China's Hengli Petchem denies media report on tax evasion

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Hengli Petrochemical's new refining, petrochemical complex is seen at Changxing island in Dalian, Liaoning province, China July 16, 2018. REUTERS/Chen Aizhu

SINGAPORE, July 27 (Reuters) - Hengli Petrochemical Co. Ltd (600346.SS), one of China's largest independent refiners and petrochemicals producers, denied on Tuesday a state-run media outlet's report that it had evaded paying tax of about $2 billion by under-reporting output of refined products.

"The report does not reflect the reality of Hengli's production and operations and the questions that it raised over the company's tax practices are unfounded," a company spokesman told Reuters.

The article published on Monday by China Energy News in its weekly e-newspaper could no longer be found on its website, or on its official Wechat account. The story had been based on unnamed industry and consultancy sources.

Reuters telephoned China Energy News but was unable speak to anyone to get an official response. A reporter at China Energy News said the story, had been removed, but was unable to say why.

China's State Taxation Administration did not immediately respond to a request for comment.

The company's Shanghai-listed shares closed 0.7% down on Monday, but had fully recovered the lost ground by late Tuesday.

Hengli operates a 400,000 barrels per day refinery and 1.5 million tonnes per year ethylene complex in northeast port city of Dalian. The refinery was operating at full capacity in 2020, according to its annual report.

China's government has increased its oversight of the refining sector this year as part of a drive to reduce emissions and cut inefficient capacity. read more

Concerned by the rapid expansion of independent refineries and consequent fuel surpluses, authorities have subjected their tax affairs to greater scrutiny, according to industry and trade sources.

($1=6.47512 yuan)

Reporting by Muyu Xu in Beijing and Chen Aizhu in Singapore; Editing by Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

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