China's top oil refiner Sinopec announced on Wednesday that it would bring in social and private capital to jointly market and sell its oil products, the first opening up of the largely monopolized area.
Sinopec said in a statement that the board of directors had approved a proposal to restructure the company's distribution business and allow social and private capital to take no more than 30 percent of the shares.
The specific capital ratio will hinge on market conditions, the statement said.
Sinopec is the first of the three big state oil companies, including PetroChina and CNOOC, to bring in private capital in the profitable distribution business since a key reform meeting promised to actively develop a diversified ownership economy.
Sinopec said the move would enable the firm to capitalize on the mixed ownership structure for better development.
"The joint supervision of investors and regulators can help our company to further improve its management, explore new business models and enhance management," Sinopec said in the statement.
The distribution of refined oil products is one of the most profitable sectors among Sinopec's main businesses.
As of the end of 2013, Sinopec operated 30,532 oil stations. Retail sales of refined oil products amounted to 114 million tonnes on the Chinese mainland last year.
According to the company's annual report, its oil distribution business pocketed 42.7 billion yuan (7 billion U.S. dollars) in 2012.
Feng Fei, an analyst with the Development Research Center of the State Council, hailed the step as "of exemplary significance" considering the energy industry remained largely controlled by the state.
Bringing social and private capital will help state-owned firms to improve efficiency and management, he said.
The latest step came amid increasingly louder calls for reforming China's inefficient and wasteful state-owned enterprises (SOEs).
The third plenum of the 18th Communist Party of China Central Committee decided in November to give market a decisive role in the economy, recognizing the private sector's indispensable role in fostering economic growth and job creation.
The decision said China shall actively develop a diversified ownership economy and allow more SOEs and other firms to develop into mixed ownership companies. Non-state shares will be allowed in state capital investment projects, effectively opening SOE shareholding to private enterprises.
China is expected to release guidelines for SOE reforms after the annual parliamentary meetings to be held in March, the Securities Daily reported.
With the government's drive for mixed ownership, analysts expect more SOEs will follow suit and open up to private capital.
Data from China's State-owned Assets Supervision and Administration Commission of the State Council showed in December that the number of the central SOEs and their subsidiaries having introduced private capital to form mixed ownership accounted for 52 percent of the total.