CHINA will provide rebates to two state oil companies on their imports of gasoline and diesel from April to June, the Ministry of Finance said yesterday.

The move, which can trim the oil firms' refining losses and avoid a domestic fuel shortage, also indicates there will be no rise in prices of refined oil products in the near future.

The government will refund the value-added tax on 500,000 tons of gasoline and 1 million tons of diesel to be imported by China National Petroleum Corp from April 1 to June 30, the ministry said on its Website. The policy also applies to imports of 500,000 tons of petrol and 1.5 million tons of diesel during the same period by China Petrochemical Corp, or Sinopec.

"CNPC and Sinopec are losing 500 yuan per ton on fuel imports while selling at capped prices," said Liu Jin, an analyst at Sinolink Securities. "The refund may offset the loss or even give a small profit."

China caps fuel prices to fight inflation, which soared to an 11-year high of 8.7 percent in February. The government last raised fuel prices in November last year, the first hike in 17 months, to encourage processing as crude prices soared. The National Bureau of Statistics is due to release March inflation data today.

"The refund signals there should be no fuel price hikes in the near future," Niu Li, an economist at the State Information Center.

China has been long under pressure to reform its fuel pricing mechanism, which is now designed to shield low-income groups. But the system has been increasingly challenged by soaring crude prices, which led to refining losses, less processing and finally shortages.

To aid refineries, the government has handed out subsidies to Sinopec for the past three years and the first quarter this year.

In another move, the government is reportedly considering lowering the 17-percent tax levied on crude imports by as much as three quarters. Refiners would benefit much more from a tax cut on crude imports than fuel product imports because of larger volume, analysts said. China's crude imports rose 25 percent in March to a record.