China to increase subsidy, cut tax to boost coalbed methane output

23 September 2013 08:57  [Source: ICIS news]

SINGAPORE (ICIS)--China will implement new incentives to further encourage exploration and use of coalbed methane (CBM), a type of unconventional gas, the State Council said over the weekend of 21-22 September.

The measures include raising subsidies to CBM producers, cutting tax burdens on the industry, better financial support as well as optimising pricing policies, according to a document from the top government body.

Currently, the central government gives a subsidy of 20 cents yuan (3 US cents) for each cubic metre of CBM produced.

Industry sources said that the subsidy will probably rise to 60 cents yuan per cubic metre.

“Value-added tax on CBM-based power plants, income tax on CBM producers will both be reduced,” the document said.

CBM development and utilisation facilities such as pipeline infrastructures will have better access to bank loans.

In addition, the country will raise on-grid prices for CBM-based power plants.

China produced just some 11 billion cubic metres (bcm) of CBM in 2012, according to the document.

China faces big challenges in achieving the production target of 30bcm in 2015, and hence the move to implement such incentives, industry source said.

($1 = CNY6.12)

By: Fanny Zhang
+65 6780 4359

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