The government is moving to extend various incentives for diesel imports that are traded electronically in a move to further stabilize energy prices that might have a large impact on overall consumer prices, market observers said Thursday.

They said the government has already decided to extend the incentives until the end of next year. Most of the incentives, which include a full tax exemption, as well as a full refund of energy levy, are currently scheduled to expire at the end of this year.

Such incentives were implemented earlier in the year as part of efforts to lower the consumer price of imported energy. The government believes the tax breaks, along with other incentives, are cutting the price by about 60 won (US$0.05) per one liter of diesel.

Since the introduction of the incentives, the amount of diesel imported for electronic trading jumped more than 50 times from a daily average of around 120,000 liters in April to 6.1 million liters in August.

The country's major oil importers such as refineries, however, oppose the move as they claim there is no way of knowing whether the tax cuts actually lead to lower prices for consumers or are pocketed by those importing diesel for e-commerce.

"There has been no monitoring efforts to check how diesel imports are actually circulated and if the tax incentives actually lead to lower market prices," said an official from a refinery who asked not to be identified.

"There must first be close examination on the validity of the effect of such incentives before a decision can be made on their extension." (Yonhap News)