Red chip China Resources Enterprise has paid 660 million yuan for a minority stake in a gas supplier in Chengdu, according to executive director Francis Kwong Man-him. It bought 36 per cent of Chengdu City Gas Group, the exclusive supplier of natural gas in the city for the next 30 years, Mr Kwong said yesterday. The purchase price valued the gas supplier at 1.83 billion yuan and had an internal rate of return of between 10 per cent and 15 per cent, he added. 'The gas project is profitable and will immediately contribute to our bottom line,' Mr Kwong said. 'We are still committed to our core retailing business in China, and the gas project will provide a growth driver to our petrochemical division.' The purchase was part of Chengdu municipal government's sale of utility assets. The Chengdu project, which has been in service for 15 years, supplies gas to about 900,000 customers. Sales growth has been healthy, rising 12 per cent year on year to 600 million cubic metres last year, while turnover was about 25 per cent higher than in 2002. Besides China Resources' 36 per cent stake, management of Chengdu City Gas owns about 10 per cent and a municipal government investment arm owns the rest. 'Prospects for the Chengdu gas sector are bright on the back of rapid industrialisation and an abundant and relatively cheap supply of gas,' Mr Kwong said. China Resources and affiliates were already involved in property development and a brewery in Sichuan province, he noted. By restricting itself to a minority stake in gas projects, the group minimised the capital and resource requirement in its petrochemical division, he said. In a separate issue, Mr Kwong said China Resources had made no progress in its plan to buy a minority stake in second board-listed Zhengzhou Gas, the exclusive supplier of gas in Zhengzhou. 'What I can say is negotiations are going nowhere,' he said. During the first half, the petrochemical division generated about 40 per cent of the group's turnover, or $8.99 billion.