China Gas aims to boost capital spending 50pc in expansion push

China Gas Holdings plans to boost capital spending by 50 per cent in the next fiscal year in a move to expand and lift sales.

Capital expenditure would reach HK$1.2 billion to HK$1.5 billion for the year to March next year, the company said.

The Hong Kong-listed company expects its sales to jump to 800 million cubic metres from 400 million cubic metres in the current fiscal year ending this month, and 176 million cubic metres in the previous year.

'We plan to increase our penetration rate in the mainland to 18 per cent from 11 per cent last year,' said managing director Liu Minghui yesterday at a company luncheon.

China Gas is seeking to take advantage of increased gas demand in the world's second-biggest energy-consuming nation where the government is implementing policies to cut pollution.

The government wants gas to contribute 8 per cent of energy supply by 2010 from about 3 per cent now.

China Gas started the natural gas distribution business in 2002 when the central government decided to build the West-East pipeline.

Mr Liu said last month that the fresh funds would be earmarked for gas projects including a plan to acquire seven to eight city distribution networks this year.

The company plans to have 65 gas projects by next year from 55 projects at present.

To fund expansion, the company secured a US$75 million loan from the Asian Development Bank last month.

China Gas had a gearing of about 56 per cent, up from 46 per cent last year, which was a 'healthy' level compared with the 100 per cent ratio at other gas suppliers around the world, Mr Liu said.

China Gas is also in talks with global players such as SK Corp of South Korea, Gail of India and its strategic investor Oman Oil for co-operation on ventures.