China to drop CBM equipment import tariffs (correction)
Editor's note: The previous version of this story listed an incorrect time period for the 8.80 bcm CBM drainage figure. This has been fixed in the version below.
Shanghai. August 31. INTERFAX-CHINA - China will eliminate tariffs and value-added taxes (VAT) on equipment used to explore and develop coalbed methane (CBM) starting this year, according to a statement issued Aug. 30 by the Ministry of Finance (MoF).
The move is intended to accelerate CBM exploration in China's coal-rich regions, the statement added.
China United Coalbed Methane Co. Ltd. (China CBM) and its domestic and foreign partners will be exempt from tariffs and VAT on imports of machines, instruments and components directly used for CBM exploration during the 12th Five-Year Plan (FYP) period (2011-2015), according to the statement.
The policy will also apply to other domestic CBM explorers once their applications are approved by the MoF, the General Administration of Customs (GAC) and the State Administration of Taxation, the statement said. The exemptions will extend to rented imported equipment.
The MoF began providing a RMB 0.2 ($0.03) per cubic meter subsidy to CBM exploration firms in 2008.
China has targeted CBM drainage of 21 billion cubic meters (bcm) during the 12th FYP period, state media China Securities Journal reported in April this year, citing the as yet unreleased CBM 12th FYP drafted by the National Energy Administration (NEA).
CBM drainage last year totaled 8.80 bcm, 1.20 bcm below government targets.
Policy incentives have spurred development of the industry, but conflicting business interests between coal miners and CBM enterprises remains a major obstacle in CBM development, Lin Boqiang, head of Xiamen University's Center for Energy Economic Research, told Interfax Aug. 31.
In addition to granting incentives, China's central government must promote cooperation between CBM companies and coal miners while supporting construction of CBM transmission pipelines, Lin added.
-HD