China to launch multi-tier household gas pricing

China will launch a multi-tier pricing mechanism for household natural gas before the end of 2015, said the country's pricing watchdog on Friday.

Under the new mechanism, residential natural gas price will increase as consumption above the base amount increases, according to a statement by the National Development and Reform Commission (NDRC).

The mechanism will have three tiers. The benchmark tier will take into account the average consumption of about 80 percent of households. Consumption beyond the benchmark amount will be charged at 20 and 50 percent at the other two tiers accordingly.

Less than 5 percent of households have been using nearly 20 percent of the natural gas, and the government has been subsidizing household natural gas to keep it cheap, said Xu Shaoshi, head of the NDRC.

China's natural gas resources per capita are less than 10 percent of the world's average, while about 30 percent of its consumption last year was imported, according to Xu.

The new move aims to make the household gas pricing system more just and encourage energy saving, he said.

This is the third multi-tier pricing mechanism introduced by the government following the two on household electricity and water.

With subsidies, China's household natural gas price averages about 2.5 yuan (0.41 U.S. dollar) per cubic meter, while the industrial natural gas price averages about 3.5 yuan per cubic meter, said Chi Guojing, secretary general of the China Gas Association.

About 80 percent of residents will not be influenced by the move, and the rest will spend only slightly more on natural gas, Chi said.