Environment minister defends Towngas' 4.6pc rise in gas fees

Minister defends 'slight' increase but critics say it is unacceptable given Towngas' huge profits

PUBLISHED : Tuesday, 26 February, 2013, 12:00am
UPDATED : Tuesday, 26 February, 2013, 7:22am

Environment minister Wong Kam-sing has defended as "reasonable" a planned increase in gas charges by the city's sole piped-gas distributor.

Hong Kong and China Gas Co, or Towngas, a listed firm controlled by property giant Henderson, said it would raise its standard gas charge by 4.6 per cent, or 1 HK cent, from April. The per unit gas charge, excluding fuel costs, will be 22.85 cents.

The fuel charge will be about 6 cents per unit after the rise.

It is the company's first increase in gas fees in three years. Towngas said it would not lift prices for the next two years.

But lawmaker Dr Fernando Cheung Chiu-hung said the rise was unacceptable given the huge profits made by the company last year. It posted a half-year net profit of HK$4.1 billion in 2012.

Wong says the price rise is only "slight". "The increase is reasonable. It also takes into account local needs, and environment protection too," Wong told the Legislative Council's economic development panel on Monday.

The increase is reasonable. It also takes into account local needs, and environment protection too

Alfred Chan Wing-kin, managing director of Towngas, said after the rise about 80 per cent of its customers would be paying less than HK$10 extra per month for their gas bills, and 55 per cent of non-residential users would pay under HK$300 extra a month.

Chan said the rise was necessary because of higher operating costs since the last fee rise three years ago. Those included the steel pipes used to distribute gas, which cost 28 per cent more, and an 18 per cent rise in wage costs. Rent and rates were up 14 and 16 per cent, respectively.

"We have invested HK$2.5 billion in the past three years on our distribution network and production facility and we are going to spend HK$3.9 billion more in the next four years," he said.

Like electricity prices, gas tariff adjustments do not generally need approval from the government. But the Environment Bureau monitors proposed rises to ensure they are reasonable.

Chan said gas prices were still below the 2006 level, when the firm began procuring natural gas from Shenzhen to replace some of the more expensive naphtha fuel. It is also exploring landfill gases, but said it would depend on their location and the feasibility of pipe networks linking to its production facility. At present, 2 per cent of its gas is generated from landfill gas, sourced from the northeastern landfills.