CLP Group

Hong Kong’s dominant gas supplier to raise fees by 4.3pc

Towngas announces first increase in two years – and promises no further increase for next two years

PUBLISHED : Friday, 16 June, 2017, 8:39pm
UPDATED : Friday, 16 June, 2017, 11:04pm

Hong Kong and China Gas (Towngas) will raise fees by 4.3 per cent from August, its first increase in two years.

The city’s sole supplier of piped gas estimated that around 80 per cent of its residential customers would pay no more than HK$10 extra a month, and it promised not to raise prices again in the next two years.

The basic tariff will be raised by 1.1 cents to 24.95 cents per megajoule.

“We are very prudent in terms of tariff adjustment, taking into full consideration our customers’ ability to absorb the additional expenses,” Towngas managing director Alfred Chan Wing-kin said on Friday.

According to a paper submitted to the Legislative Council, the company said it planned a capital investment of about HK$3.8 billion over this year and the next two.

Chan added that operating costs including materials, staff expenses and rentals had gone up “substantially” in the past two years on top of inflation.

“It is therefore necessary to adjust our tariff to cope with the rise in costs,” Chan said. “The proposed adjustment is therefore modest.”

Hong Kong’s Towngas posts better than expected HK$4.33 billion interim profit

About half of the company’s commercial and industrial customers would pay less than HK$276 extra for their monthly gas consumption, according to the company.

The monthly maintenance charge for residential customers will remain unchanged at HK$9.5 in the coming years.

The government does not regulate Towngas in price or profit, but under an agreement in 1997 the company needs to give notice three months in advance about any tariff adjustment and justifications, and brief Legco and the Environment Bureau’s Energy Advisory Committee.

Angus Wong Chun-yin, senior manager in policy advocacy at the World Green Organisation, believed the increase was acceptable given that it was lower than the inflation rate.

“Their reasons for the fee rise are understandable,” Wong said. “They need to continue to improve their pipes and other facilities.”

He added that the company had so far shown self-restraint in putting up prices, with five rises over the past two decades, even though it was not subject to government regulation.

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But Summer Li Fung-tsing, community organiser of the Concerning Grassroots’ Housing Rights Alliance, said although the rise was not high, it would still put pressure on grass-roots families.

“They cannot control rents or transport fees, so energy is one of the few areas they can save on,” Li said. “Now the margin of how much they can save has become smaller.”

Li called for the government to subsidise the energy bills of poor families.

She said the government should regulate Towngas under a system similar to the profit control agreement it has with the city’s two electricity suppliers – CLP and HK Electric.