Sinopec Shanghai Petrochemical Co, a unit of Asia's biggest oil refiner, received a government subsidy of 2.3 billion yuan (US$336 million) for refining losses last year, its top official said.

An attendant operates a pump at a Sinopec station in Shanghai. Sinopec Shanghai Petrochemical Co received a government subsidy of US$336 million for refining losses last year. Short-term loans increased substantially last year. [Shanghai Daily]

State aid covers less than 50 percent of the firm's refining losses last year because of record crude costs and government caps on fuel prices, Chairman Rong Guangdao said in Beijing yesterday during the National People's Congress.

The company's short-term loans increased "substantially" last year due to the losses, Rong said. He expects the government to be more transparent and to make the fuel-pricing system more market-based.

In December, Sinopec Shanghai said it expected to post a "substantial loss" for last year because of a sharp decline in prices and falling demand. China Petroleum and Chemical Corp, known as Sinopec, is restructuring its business and plans to take full ownership of subsidiaries, Bloomberg News reported.

It wasn't a good time now for Sinopec to buy out minority shareholders in the Shanghai unit because of the bearish market and some technical setbacks, Rong said.

Sinopec Shanghai cut production in the first two months compared with a year earlier.

(Shanghai Daily March 9, 2009)