Sinopec gets direct subsidy and rebates

China Petroleum & Chemical Corp. (Sinopec), the world’s third-largest oil refiner by capacity, has received about 30 billion yuan (US$4.37 billion) in direct subsidy and rebates for crude oil and refined fuel imports in this year’s first-half. But even with the subsidy, analysts expect Sinopec’s profit to slump more than 70%, as the state-controlled company is being hit by surging crude oil prices while prices of its fuel products are tightly capped by the government. The company received a 7.4 billion yuan (US$1.08 billion) direct subsidy in the first quarter to help offset its refining loss of 20.63 billion yuan (US$3 billion). Officials at Sinopec and rival PetroChina subsequently said the second-quarter subsidies came in the form of a rebate equal to three-quarters of the 17% value-added tax levied on imported crude oil. (July 31, 2008)