ENN to continue push into vehicle gas market

Mainland gas distributor ENN Energy says it will continue to acquire more projects and aims to increase sales to vehicle operators, capturing opportunities from air pollution policies introduced by Beijing that seek to replace coal and oil with cleaner-burning gas.

The company, based in Hebei province and controlled by entrepreneur Wang Yusuo, has set aside 20 per cent of its 3.1 billion yuan (HK$3.9 billion) investment budget for boosting gas sales for project acquisitions, said chief financial officer Wang Dongzhi.

ENN acquired five city gas projects and four industrial park gas projects in the first half of the year, mostly through local government tenders or auctions.

Industrial parks are more attractive for gas distributors since industrial and commercial users consume a lot more gas than residential ones, resulting in fatter profit margins for gas distributors because the fixed costs of each unit of sale are lower.

Gas sales to industrial and commercial users made up 62.3 per cent of ENN's total revenues in the first half of the year, followed by 17.8 per cent from fees charged to connect residential users to its pipeline network, 13.2 per cent from gas refilling for vehicles, and 5.2 per cent from wholesaling.

Wang said ENN plans to raise the revenue contribution from gas for vehicles to 20 per cent by 2015.