A notice issued on Saturday by the Ministry of Construction and seven other ministries has called for a commercialized heating system instead of the current free heating system within two years.

Regarded as a public welfare service, heating is free for urban residents who work in State-owned enterprises (SOEs) or governmental organizations in northern China. This has been the case since the 1950s.

According to the notice, government units should not be paying heating bills for employees, adding that householders should pay all fees directly to the heating companies.

"The reform will help solve accumulated problems under the old system, such as energy wastage, outdated equipment and payment delays," said Chen Wenzhan, head of the Beijing Municipal Administration Commission.

"But changing the system will be difficult as well. A large sum of money will be needed to install measurement equipment in homes."

According to China Electric Power News, more than 90 percent of thermal-power plants in China are making huge losses every year.

Water prices have risen by 30 percent in the past five years, and coal now costs more than 200 yuan (US$25) a ton, three times as much as in 2001. But the price of heating supply remains unchanged, the report said.

As part of the reform, the notice stated that heating would be a commodity priced by the market. Local governments are allowed to adjust prices if prices of raw materials change by more than 10 percent.

The notice also said local governments and individual work units should provide financial subsidies to residents, especially to low-income households.

Currently, free heating is supplied to households from November 15 to March 15 in Beijing, four months in total, and the price for each square-meter is 24 yuan (US$3) every season, according to the Beijing Heating Group.

But low-income households still find it tough to afford. "We will have to pay 1,700 yuan (US$ 210) to heat a 70 square-meter flat under the new system," said 45-year-old laid-off worker Jiang Yongfu in Beijing. "That's almost three times my monthly income."

In spite of this, Jiang said he supports the reform because "commercialization is inevitable," but he added that subsidies should be given and an installment plan introduced.

The plan for China's heating system reform was drafted at the end of 2003, and has been tested in eight northern provinces including Shandong and Henan.

(China Daily December 19, 2005)