Project meant to replace supply from Hainan may result in higher power bills
CLP Holdings, Hong Kong's largest electricity distributor, will announce today its intention to spend HK$8 billion to HK$9 billion to build its own liquefied natural gas (LNG) processing plant on Soko Island, according to sources.
The move will effectively discard the option of importing the clean fuel from a rival project in Zhuhai planned by Sinopec Corp, Asia's largest oil refiner.
The decision to pursue the development, which still needs government approval, also raises the prospect of higher electricity bills; the added investment can be passed on to end-users under the scheme of control regulatory mechanism which partly sets the level of profit an electric company can make by its fixed assets.
The CLP project south of Lantau Island aims to replace the utility's existing supply from Hainan Island's Yacheng gas field which is expected to be depleted by 2011.
The city administration has yet to publicly state its views on the plan and according to sources, the government will remain reticent at least until the conclusion of negotiations over the next regulatory agreement.
The government yesterday declined to comment on when its two-month-old discussions with CLP and Hongkong Electric Holdings, the city's other power utility, might be completed. The current scheme of control expires in 2008.