The National Development and Reform Commission (NDRC) and the Ministry of Construction jointly issued a circular recently allowing the heat supply price to fluctuate with the coal price change, an SDRC source announced on Monday.

Despite China's general evolution from a planned economy to a market economy, the prices of some resource products monopolized by state-owned enterprises, including electricity, water, oil and heat supply, are still set by the government and do not fluctuate according to the supply and demand relations in the market.

In recent years, although China's coal price has been rocketing, the price of electricity and heat supply did not follow such changes, making many power and heat enterprises witness serious deficits due to increasing costs and stable sales prices.

According to the recent circular, when the coal price rises over 10 percent, heat suppliers have the right to adjust their heat factory price accordingly, the NDRC said.

Previously the government issued a circular to let electricity prices fluctuate with coal prices, which is decided mainly by market supply and demand.

(Xinhua News Agency November 9, 2005)