Xinao to cut spending 12pc amid downturn
Xinao Gas Holdings, one of the mainland's largest piped-gas suppliers, is retrenching amid the economic downturn, cutting spending by 12 per cent to 1.3 billion yuan (HK$1.47 billion) this year, according to its new chief executive.
Chen Jiacheng, promoted from general manager to chief executive in November, said yesterday that the group's spending would be more prudent and it would focus on 71 piped-gas projects across the nation.
Last year, Xinao spent 1.5 billion yuan largely on building gas pipeline networks and vehicle gas stations, he said.
Now, he said, 'We have more stringent controls on spending in order to maintain better cash flow'.
The poorer economic outlook also prompted Xinao's unlisted parent, Xinao Group, to postpone a planned US$700 million joint venture in Vietnam, he added.
Xinao Group and state-owned Vietnam Oil and Gas Corp recently reached an understanding on energy co-operation.
It will pave the way for the construction of a gas depot and a liquefied natural gas distribution system with an annual capacity of 3 million tonnes in Vietnam.
'Last year, Vietnam was hurt by its own economic problems, and this year by the global financial crisis,' Mr Chen said.
'We will put this project on hold until next year when we will evaluate what opportunities will be available.'
The group aimed to sell 33 per cent more gas this year to 2.8 billion cubic metres after meeting targeted growth of about 30 per cent last year, finance director Yu Jianchao said.
He added that growth in industrial and commercial consumption was lacklustre but demand for vehicle gas and from residential users remained strong.