National Development and Reform Commission and National Energy Administration regarding

Improve the pricing mechanism for natural gas pipeline transportation within the province.

Guiding Opinions on Promoting High-Quality Development of the Industry

National Development and Reform Commission Price [2025] No. 1014

Development and Reform Commissions and Energy Bureaus of all provinces, autonomous regions, and municipalities directly under the central government, as well as the Xinjiang Production and Construction Corps; all dispatched agencies of the National Energy Administration; and China Oil & Gas Pipeline Network Corporation:
  To implement the spirit of the Third Plenary Session of the 20th Central Committee of the Party and the decisions and arrangements made by the Party Central Committee and the State Council on deepening reform of the oil and gas market system and improving the price governance mechanism, strengthen price regulation in natural monopoly segments, enhance the efficiency of natural gas pipeline transportation, and promote high-quality development of the industry, we hereby put forward the following recommendations for refining the pricing mechanism for natural gas pipeline transportation within the province.
   I. Clearly define pricing authority and scope
  The transportation prices for natural gas pipelines at all levels within a province (including autonomous regions and municipalities directly under the central government; the same applies hereinafter) shall be set by the provincial development and reform authorities, and in principle, the authority to set these prices will no longer be delegated downward. For those segments of inter-provincial natural gas pipeline systems—along with their associated branch lines—that have already been included in the nationally unified pricing system, the provincial development and reform authorities shall no longer set prices independently.
   II. Reasonably Determine the Pricing Model
  The pricing for natural gas pipeline transportation within the province should adopt a unified pricing model, transitioning from the current “one line, one price” and “one enterprise, one price” approaches to zone-based pricing or a province-wide uniform price. This will ensure effective alignment with the pricing mechanisms for inter-provincial natural gas pipelines, thereby facilitating the establishment of a “nationwide integrated network.” During the transition period, measures such as setting benchmark prices can be implemented to guide pipeline operators toward survival of the fittest, promote resource integration, and enhance the operational efficiency of the pipeline network.
   III. Scientifically Determine Price Levels
   (1) Unified pricing methods and principles. The provincial development and reform authorities shall, on the basis of rigorously conducting cost monitoring and auditing, determine the natural gas pipeline transportation prices within the province according to the “allowed costs plus reasonable returns” approach. Specifically, they shall first determine the allowed revenues by approving the allowed costs and regulating the allowed returns, and then set the pipeline transportation prices by taking into account the gas transmission volume (turnover). The benchmark price may be determined based on the average price level of pipeline operators within the province, or alternatively, it may be set by referencing the price levels of pipeline operators with better cost management practices. For regions adopting differentiated pricing, price zones shall be delineated according to local natural gas market structures and pipeline distribution conditions. In principle, the prices for newly constructed pipelines shall be aligned with either the benchmark price, the price applicable to the relevant price zone, or a unified provincial price.
   (2) Reasonably set pricing parameters. The depreciation period for natural gas pipeline assets shall, in principle, be set at 40 years. Safety production expenses shall be fully allocated in accordance with relevant national regulations to ensure the safe and stable operation of the pipelines. The permitted rate of return shall be determined by taking into account factors such as pipeline construction needs and users’ affordability, and in principle shall not exceed the yield on 10-year government bonds plus 4 percentage points. The approved pipeline gas transmission volume (turnover) shall be subject to a minimum load factor requirement. The specific level shall be determined through comprehensive consideration of factors including promoting improved pipeline utilization efficiency, actual transportation loads faced by enterprises, and the pipeline’s operational stage; in principle, this minimum load factor shall not be lower than 50%. Other pricing parameters may refer to the relevant provisions of the Management Measures for Inter-Provincial Natural Gas Pipeline Transportation Prices and the Cost Monitoring and Audit Measures, and shall be reasonably determined in light of local conditions.
   (3) Clarify the price regulation cycle. The prices for natural gas pipeline transportation within the province shall be subject to periodic verification and dynamic adjustments, with a regulatory cycle of原则上 3 years. If significant changes occur during the regulatory cycle—such as in related assets, costs, or gas transmission volumes—verification may be conducted ahead of schedule.
   4. Optimize pipeline planning and investment management
  All provinces should strengthen the construction and operational management of natural gas pipelines within their jurisdictions, adhering to integrated planning and scientific approval procedures to ensure that pipeline projects are economically viable and operate smoothly and efficiently. The provincial energy authorities shall assume unified responsibility for the planning of natural gas pipelines within their respective provinces. It is essential to adopt a systematic approach, taking into account local resource endowments and market supply-and-demand conditions while complying with relevant national plans, so as to optimize the layout of the province’s natural gas pipeline network, reduce transportation levels, shorten transportation routes, and avoid redundant construction. We must also tighten the review and control of investment projects involving pipelines and associated facilities, strictly limiting the addition of unnecessary intermediate links and projects that are economically unviable or detrimental to the efficient utilization of resources. Project approval documents should clearly specify the pipeline transportation pricing policies to be implemented once the project comes into operation. We should strengthen the review of investor qualifications, giving priority to supporting established pipeline operators with strong overall capabilities in investing in and building new pipelines, thereby making full use of existing resources and promoting centralized and integrated operations. Provided that such projects comply with government planning requirements and ensure the safe operation of the pipeline network system, we will support qualified municipal gas companies and large-scale users in connecting nearby to national and provincial trunk lines and branch lines for natural gas delivery.
   V. Reduce the gas supply link
  The development and reform departments and energy authorities of each province shall carefully assess the gas supply chain within their jurisdictions and the price increases at each stage. They should adopt comprehensive measures to streamline the gas supply chain, eliminate layer-by-layer price markups, and reduce downstream gas consumption costs. Upstream gas suppliers are encouraged to engage in direct procurement and sales with municipal gas companies and large-scale industrial users. For gas supply links such as “back-to-back” distribution stations that have not made substantial investments in pipeline networks and do not provide essential pipeline transportation services, efforts to phase them out and abolish them should be further intensified. For those that are temporarily difficult to abolish, service prices may be strictly determined based on the principle of compensating only for operation and maintenance costs. For provinces where multiple intra-provincial pipelines connect to supply gas, the development and reform departments may, in light of actual needs, set an upper limit on the cumulative increase in pipeline transportation prices, thereby promoting optimization of transportation routes and alleviating the burden on users.
   6. Regulate market order
  Natural gas pipeline operators within the province must strictly enforce the pipeline transportation pricing policies and shall not deliberately circumvent government-set prices under the guise of so-called “transit agency fees” or “pipeline rental fees.” They must also refrain from indirectly raising pipeline transportation prices by altering pricing methods or imposing mandatory services. In areas where the main natural gas pipeline network can already provide supply, enterprises must not leverage their monopolistic position in the pipeline network to impose compulsory centralized purchasing and sales at inflated prices. It is essential to earnestly implement the requirements for fair access to and use of pipeline network facilities, and to standardize practices related to gas transmission services, contract performance, information reporting, and public disclosure. The development and reform departments of each province should actively cooperate with market regulatory authorities to strengthen price supervision and inspection, severely investigate and punish any illegal or non-compliant pricing behaviors by relevant enterprises, publicly expose those cases involving serious violations, and effectively safeguard the order of the natural gas market.
   7. Strengthen organizational implementation.
  Provinces shall conduct a comprehensive survey of the number of natural gas pipelines within their jurisdictions, as well as the entities investing in them and their operational status. They should compile a list of intra-provincial natural gas pipelines that should be subject to government pricing and keep this list updated on an ongoing basis. A systematic assessment of pipeline planning, investment, and price management should be carried out, and relevant requirements should be promptly reviewed and refined accordingly. A comprehensive set of regulations for managing natural gas pipeline transportation prices within the province should be formulated and perfected as soon as possible, clearly defining the transition period and methods for price mechanism reform, and ensuring that implementation is steady and orderly.
 

National Development and Reform Commission

National Energy Administration

July 28, 2025