China Gas boss braces for board row
Liu Minghui is again facing pressure, this time from BJH, which wants more seats at top table
Barely a year since his reinstatement at the helm of China Gas Holdings after a prolonged board power struggle, Liu Minghui again faces the tricky task of handling a prospective fight over management control, balancing the interests of major stakeholders in the firm he co-founded in 2002.
Liu, through his own investment and purchases via China Gas Group - a joint venture between Liu and London-listed energy firm Fortune Oil - has since 2004 been the largest shareholder of China Gas, the nation's largest city natural gas distributor by number of projects.
State-owned Beijing Enterprises Group (BJG), the sole gas distributor in the city via its Hong Kong-listed unit Beijing Enterprises Holdings (BJH), has also been investing in China Gas as a way to expand its lucrative gas business beyond the nation's capital. China Gas operates 184 city piped gas projects in 21 provinces and municipalities. BJG's investment raises the prospect of a tussle for management control.
BJH has a monopoly in Beijing, selling 7.94 billion cubic metres (bcm) of gas last year to the city that has ambitious goals to raise gas usage and phase out coal to combat air pollution.
BJH also has a 40 per cent-owned joint venture with PetroChina - the nation's dominant gas producer and importer - that operates long-distance pipelines to move gas from fields in the northwest to regions around the Bohai Bay economic rim. They moved a total of 23.72 bcm last year, or 16.5 per cent of the nation's total gas consumption. This relationship gives BJH long-term access to gas resources, a big advantage versus rival distributors in developing new projects.
Since April last year, BJG has been aggressively accumulating China Gas shares, raising its stake from 3.28 per cent to 22 per cent last month, unseating Liu as the largest shareholder. BJG on Tuesday agreed to sell the 22 per cent interest to energy-to-brewery conglomerate BJH, triggering speculation this could be a prelude to a possible injection by BJG of its Beijing gas distribution operations into China Gas in a move that could make it BJH's gas flagship.