Urban Gas: EU Management System and China's Reform

Author: Jiang Runyu
Publisher:
Publish Date: 2006-01-01
Features: The pipeline gas industry in EU countries has developed relatively maturely, and in establishing management systems suitable for the development of natural gas markets, especially in establishing and implementing natural gas laws and regulations, it has accumulated rich experience. Comprehensively learning and drawing on the experience of EU countries is necessary for deepening the reform of urban pipeline gas management systems in China. For this purpose, we applied to the China-EU Small Project Facilitation Fund Office to carry out research and experience exchange on the "Experience of EU Natural Gas Pipeline Development and the Reform of Urban Pipeline Gas Management Systems in China." Our application was approved and funded by the EU delegation. During the project implementation, we studied the reforms of the gas systems in EU countries that have been ongoing since the 1990s. Regarding the EU's practices, combined with China's situation, we believe the following aspects are particularly important:
1. Regarding the property rights system reform. The gas industry in the UK is regarded as a public utility and historically implemented a monopoly of state capital.
2. Regarding the introduction of competition mechanisms in the gas industry. In EU countries, the UK pioneered the reform of eliminating monopolies and introducing competition, which achieved significant success.
3. Regarding government regulation during the monopoly operation stage. The EU was also in a long period of monopoly operation before reform, and its regulatory experience during this stage was the result of long-term accumulation.
4. Regarding market access regulation. License systems and franchise systems are respectively applicable to different stages of development in the gas industry.
5. Regarding the regulation of distribution prices. The distribution prices in EU countries are currently undergoing reforms to liberalize regulation, ultimately achieving a price management system where the government is solely responsible for service fees for transmission and distribution pipelines.
Based on the above understanding, we analyzed the direction, methods, and tasks of China's full-power reform of the gas industry, and proposed policy recommendations for implementing the franchise license system.