Towngas in deal for Shenzhen Gas stake

Hong Kong and China Gas (Towngas) has finally signed a much-awaited framework agreement to buy 30 per cent of a Shenzhen Gas joint venture for 271.5 million yuan (HK$254.53 million).

Towngas last night said the deal, foreshadowed this time last year, would see it become the second-largest shareholder in the special economic zone's gas monopoly and would give it access to the rapidly growing Pearl River Delta.

With a net asset value of 900 million yuan, Shenzhen Gas has about 400,000 household customers, a pipeline network of 900km, a 10 per cent stake in the Guangdong liquefied natural gas (LNG) terminal and a 51 per cent stake in liquefied petroleum gas (LPG) storage Shenzhen Sino-Benny LPG.

Towngas beat a number of foreign bidders for the project. Its managing director Alfred Chan Wing-kin said yesterday: 'It is strategically important for our gas business in both mainland and Hong Kong ... and future joint ventures in the Pearl River Delta.'

The agreement Towngas signed yesterday with Shenzhen Gas will pave the way for a contract to set up a joint venture in the fourth quarter of this year.

The venture will be owned 60 per cent by Shenzhen Gas, 30 per cent by Towngas and 10 per cent by New Hope Holding.