Main side effect of price control.
I just got this news from net. Just read it then you will know what the out ome of the price control in those China big company......
--------
News: Chinese oil giants to get tax rebate amid price controls
China's two major state oil companies will get a tax rebate on gasoline and diesel imports to help offset losses blamed on price controls, the government said Wednesday.
China National Petroleum Corp. and China Petroleum & Chemical Corp., better known as Sinopec, will receive a refund on a 17 percent value-added tax on imports between April 1 and June 30, the Finance Ministry said on its Web site.
The government ordered the companies in November to step up imports to ease fuel shortages. CNPC and Sinopec blamed the shortages on controls that barred them from passing on record-high crude prices to consumers, leading to losses for their refining units and prompting them to cut back output.
The rebate "is aimed at reducing the refining losses of the oil companies and increasing refined oil products supply in the domestic market to prevent a shortage," the government newspaper China Daily said.
CNPC will receive a rebate on imports of 4.2 million barrels of gasoline and 8.5 million barrels of diesel, while Sinopec gets a rebate on a similar amount of gasoline and 12.7 million barrels of diesel, the Finance Ministry said.
Beijing froze retail gasoline and diesel prices in September as part of efforts to contain rising inflation. It raised prices by about 10 percent in November to curb surging demand but has rejected appeals by the oil companies for more increases.
Analysts had expected the oil companies to get government aid to offset refining losses. They received similar aid at the end of 2006.
Sinopec, Asia's biggest refiner by volume, said this month its refining unit lost 13.7 billion yuan ($2 billion) in the latest quarter due to the price freeze.
Sinopec said it received a 12.3 billion yuan ($1.75 billion) government subsidy to compensate for the losses.
CNPC's publicly traded arm, PetroChina Ltd., said in March that its refining unit lost 20.1 billion yuan ($2.9 billion) in the latest quarter due to the price freeze. The company has not said whether it received a government subsidy.
-----
So far there is only two big oil company that have their taxes offset / Taxes refund. Others China company are able to withstand this type of price freeze by govt.?
This article tells when the China govt. freeze the price of those products that those company produced, it will lead a volume cut back in those company output of products, if things goes bad, the company might may fall into bankrupt and that would be marked The End.
