UPDATE 2-Beijing city raises pump prices to fund cleaner fuel

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By Emma Graham-Harrison

BEIJING, Oct 6 (Reuters) - Beijing's city authorities have raised pump prices by up to 4 percent to cover the cost of cleaner fuel, a bold gesture of support for efficiency and green growth on a day when global oil markets hit an eight-month low.

China's central government has for years ignored rising oil markets to hold down state-set diesel and gasoline prices -- and protect demand growth -- out of fear costlier energy could feed inflation or social unrest.

But if the capital of the world's No. 2 two oil consumer now sets a new example for the rest of the country, it would be a further blow to crude oil markets which are already tumbling as the worsening financial crisis eats into demand in the West.

From Oct. 7, gasoline prices in Beijing went up by 200 ($29.18) yuan per tonne, over 2 percent, with the exact proportion of the increase depending on the fuel quality. Diesel pump prices rose 290 yuan per tonne, around 4 percent.

Wholesale prices were also raised.

For a table of retail price changes in China since 2003 please click on [ID:nSP128559].

The move is to help cover the cost of providing the city with cleaner but more expensive Euro IV standard fuel, the Beijing Municipal Commission of Development and Reform said in a notice posted on its website (www.bjpc.gov.cn).

The Olympic Host city largely won a difficult struggle to lift its recurrent shroud of smog during the August Games.

The clearer skies were so popular with the city's affluent and increasingly environmentally aware inhabitants that leaders decided to roll out a permanent car control scheme.

They also aim to boost public transport and limit the number of new vehicles that hit its clogged streets each year.

CLEAN, GREEN BEIJING

The Beijing increase comes on top of a surprise nationwide hike in June of nearly 20 percent. But it is not the first time residents of the capital have had to deal with fuel prices rising faster than for their compatriots.

In a nationwide hike in March 2006, Beijing's prices rose more than the national average.

The National Development and Reform Commission, which sets energy policy, explained that move by saying it was more expensive to refine Euro-III standard gasoline for the capital than the dirtier fuel used elsewhere in China.  Continued...