China will keep a neutral stance on oil prices after a fuel shortage receded, a top official said on Monday.

Meanwhile, the nation would take measures to boost coal supplies to ease an electricity crisis, he said.

"The tight diesel supply situation has greatly improved, and gasoline supplies in particular are relatively adequate now," Zhang Guobao, head of the National Energy Administration, China's top energy regulator, said.

The country had suffered a fuel shortage since July last year after domestic refineries curtailed output to avoid losses caused by government-controlled fuel prices and soaring crude oil import costs.

China was forced to increase oil product prices by as much as 18 percent in June this year to persuade refiners to supply more fuel on the domestic market, Bloomberg News reported.

"Whether to adjust fuel prices or not after the Olympic Games will depend on China's economic growth, as well as domestic and international energy supplies at the time," Zhang said. The Olympic Games end on August 24.

Chinese energy use increased by 7.7 percent last year, above the country's 10-year average, according to the BP Statistical Review.

To avoid oil supply disruptions, China started construction on four emergency crude oil storage bases in Zhenhai, Zhoushan and Qingdao on the east coast and in the north city of Dalian in 2003. The depots, set to be completed this year, have a total capacity of 16.4 million cubic meters, Zhang said on Monday.

The world's biggest coal producer and consumer said it would take additional steps to boost domestic production of the fuel to help ease the nation's electricity crisis. China, facing its sixth year of power shortages, relies on coal for almost 80 percent of its electricity generation.

Coal shortfalls may be reduced when the government's measures take effect, Zhang said. The trend of rapidly rising prices may also abate, he said.

China capped coal prices at the June 19 level until the end of this year to help power producers cope with soaring costs. Four of China's biggest power companies including China Datang Corp and China Guodian Corp may have posted combined losses of about 7 billion yuan (US$1 billion) in the first half, the Shanghai Securities News reported last month.

To help power plants, the government could adopt short-term measures such as granting subsidies through exemption, or rebates of value-added taxes, similar to those granted to state oil companies, Simon Wong, director at Fitch's Asia-Pacific energy and utilities team, said.

Almost 3 percent of the country's coal-fired generation capacity was left idle last month because of the coal deficit, the State Grid Corp of China said.

(Shanghai Daily August 19, 2008)