Reuters reported that China may cut value added tax and port charges on imported coal to encourage more overseas purchases as one of the moves to increase energy supplies in the country as it battles against the worst summer power shortage in years.

The National Development and Reform Commission has said that it would encourage coal imports and urge miners to boost output to increase supplies to power plants but it did not mention any specific measures it was considering in the release on its website.

An official with NDRC said that relevant government departments are studying adjustments of VAT and port charges relating to coal imports. Falling imports of energy products were one of the reasons behind recent tightness in domestic energy supply and the government is considering policies to inhibit the trend.

China's coal imports in the first 4 months of the year shrank 24% from a year earlier to 43.5 million tonnes, as utilities shunned more expensive supplies from overseas and focused on domestic coal instead. But fast rising coal prices in China since April have once again made imports an attractive option and traders are eagerly waiting for the world's top coal consumer to regain appetite for foreign supplies it showed in 2009 and 2010.

China levies 17% valued added tax on imported coal and port charges range from CNY 33 per tonne to CNY 36 per tonne in addition to storage cost of CNY 0.1 per tonne to CNY 0.8 per tonne per day.

(Sourced from Reuters)