50 The fertilizer industry was exempted from higher prices. In April 2015, the government merged the two sets of prices into one for non‐residential consumers and deregulated the prices of natural gas supplied directly to industrial users. To merge the two prices, the government increased the price of existing gas by 0.04 yuan/m<sup>3</sup> (US$0.18/mcf) and decreased the price of incremental gas price by 0.44 yuan/m<sup>3</sup> (US$0.20/mcf) (Xinhua 2015a).

The NDRC announced in March 2014 that the residential sector, which had been shielded from price increases between 2013 and 2014, would move to a three‐tier tariff system by the end of 2015. The first tier would cover 80 percent of gas usage, the second tier the next 15 percent, and the last tier the remaining 5 percent. The notional relative prices for the three tiers would be in the ratio 1:1.2:1.5, although the specifics of the pricing system would be left to local governments and public hearings.

Shanghai introduced increasing block tariffs and raised residential gas prices rapidly (Table 9). In September 2015, the NDRC reported that 50 cities from 13 provinces or municipalities had adopted multi‐tier pricing of residential natural gas (Xinhua 2015b). The new three‐tier tariffs for Beijing, which came into effect in January 2015, are also shown in Table 9.

**Table 9: New residential gas prices in Shanghai and Beijing**

|Shanghai effective|September 20|14|Beijing eff|ective January|2016|
|---|---|---|---|---|---|
|Annual volume|Yuan/m<sup>3</sup>|US$/mcf|Annual volume|Yuan/m<sup>3</sup>|US$/mcf|
|Less than 310 m<sup>3</sup>|3.0|13.84|<300 m<sup>3</sup>|2.28|10.00|
|Between 310 m<sup>3</sup>and 520 m<sup>3</sup>|3.3|15.22|300–500 m<sup>3</sup>|2.50|10.97|
|Greater than 520 m<sup>3</sup>|4.2|19.37|>500 m<sup>3</sup>|3.90|17.11|

_Sources:_ Reuters 2014b for Shanghai, Energy Research Institute for Beijing.

In November 2015, the NDRC announced a new policy for gas pricing and also cut gas prices for non‐ residential consumers by about 30 percent to respond to falling gas prices in Asia. According to customs data, the average price of LNG delivered to China fell from $11.15/mmBtu in January to $7.39/MMBtu in September 2015. Non‐residential city‐gate prices were lowered by 700 yuan per thousand cubic meters, or about US$3.35/mmBtu. Under the new policy, buyers and sellers will be able to negotiate final delivered prices starting in November 2016. The pricing policy has changed from setting ceilings to setting benchmarks for non‐residential gas prices in each region. For the first year, prices can be up to 20 percent higher than the new benchmark gate prices ( _Platts LNG Daily_ 2015).

# **Colombia**

The Government of Colombia established a fuel price stabilization fund in 2008, named Fondo de Estabilización de Precios de los Combustibles (FEPC). The fund soon began to build a deficit, and as of January 2015, the deficit stood at Col$4.8 trillion (US$2 billion). In September 2004, the Constitutional Court ruled that levying a fee on fuels to finance FEPC was unconstitutional, prompting the government to include two articles in the Tax Reform Act of 2014 to continue contributions to FEPC following the principle of over‐recovery of costs in times of low world prices paying for deficits from under‐recovery in times of high world prices ( _Portafolio_ 2015a). In November 2015, however, the Constitutional Court