Towngas readies HK$10b for mainland China projects
Hong Kong's only piped-gas supplier would put the money in city-gas distribution, water supply and treatment projects and new energy businesses, managing director Alfred Chan Wing-kin said after the company's annual shareholders' meeting.
Hong Kong and China Gas (Towngas) plans to plough HK$10 billion into its mainland energy and utilities businesses in the next three years, as it continues to diversify away from its mature home market.
Hong Kong's only piped-gas supplier would put the money in city-gas distribution, water supply and treatment projects and new energy businesses, managing director Alfred Chan Wing-kin said after the company's annual shareholders' meeting.
In the past 15 years, the firm has invested more than HK$20 billion in 165 projects on the mainland.
"We are especially focused on clean energy development," Chan said. "The mainland is increasing its urbanisation level by 1 to 2 percentage points each year from the current 52 per cent, so new towns will create more gas demand.
"Policies to cut air pollution will also boost gas demand."
Last year, Towngas's mainland gas sales grew 15 per cent to 11.9 billion cubic metres. It had 107 mainland city-gas projects at the end of last year, of which 73 were held by listed subsidiary Towngas China.
In the core gas, water and related business, the mainland accounted for more than half of Towngas's total sales of HK$22.4 billion last year and contributed 35 per cent of operating profit of HK$7.63 billion. Operating profit fell 1.3 per cent in Hong Kong but grew 9.8 per cent growth on the mainland.
Director Peter Wong Wai-yee expected gas sales in Hong Kong to be flat this year, despite first-quarter sales dipping slightly due to warmer-than-normal weather. Lower consumption by residential users will be offset by commercial and industrial ones, partly by converting some diesel-using customers to gas users.
The firm raised is basic gas price by 4.5 per cent from April 1 to offset higher staff, rent and material costs. It has promised not to raise the tariff for two years.
Chan said Towngas had no plan to inject the 34 mainland city-gas projects it directly owns into Towngas China, since its partners in the projects, many of which are in major cities, prefer the bigger Towngas to be their partner.
Shareholders of both Towngas and Towngas China were also happy with the status quo, he said, and it was difficult to strike a balance between the interests of both sets of shareholders to set a price for the projects if they were sold to Towngas China.
