Moving Forward

Towngas marches on with Hong Kong’s ups and downs

The utility’s colourful history dates back 154 years to early colonial times

PUBLISHED : Wednesday, 04 May, 2016, 10:00pm
UPDATED : Thursday, 05 May, 2016, 12:08pm

Since its establishment 154 years ago with a capital of only 35,000 British pounds in the early colonial days, Hong Kong and China Gas (Towngas) has come a long way as a provider of cleaner-burning energy.

Its story began when British entrepreneur William Glen won a concession from the Hong Kong government in 1861 to light the city. Instead of raising money in Hong Kong, he registered the firm the following year in London and sold shares mainly to investors in Britain.

As the oldest public utility company and one of the oldest listed companies in the city, Towngas started with a single plant in today’s Western district making combustible gas from coal, 24 kilometres of gas pipelines and 500 gas-powered street lamps dotting the Central and Western districts of Hong Kong Island.

The fact that key decisions for the firm were made by a board in Britain unfamiliar with Hong Kong led to a missed opportunity when it decided against applying for a concession to supply electricity in the city. This saw the formation of an electricity company to rival Towngas in the lighting business.

Still, the introduction of new gas burners greatly enhanced the cost competitiveness of gas, and applications soon extended to cooking, bathing and water heating, leading to rapid profit growth in the early part of the 20th century.

Effort needed to tackle labour shortage in artisanal, technical and trades-related professions, says Towngas director

Towngas’ fortunes took a turn for the worse during and between the two world wars, when it endured extreme weather events, an economic depression, bombs and a lack of fuel that briefly saw it suspend services entirely. Subsequent reconstruction and a flood of migrants from the mainland heralded several decades of boom and expansion, but also the firm’s exit from the street lighting market in its centenary year in 1964 due to rising competition from electricity.

In 1954, Hong Kong interests took majority control of the company and its headquarters was moved to the city, where it floated shares in 1960.

Millennials should embrace Hong Kong as ‘a base to develop businesses in China and elsewhere,’ says Towngas director

From only having 14 per cent of the non-electricity energy market in the early 1970s, which was then dominated by bottled liquefied petroleum gas and kerosene, Towngas became the dominant player thanks to the massive construction in subsequent decades of government and private housing estates that used gas.

As gas generated from heating coal was heavily pollution-prone, Towngas in 1967 changed its fuel source to fuel oil and in 1973 to naphtha. In 2006, it started using natural gas from Australia to replace 60 per cent of the naphtha it was using.

Today, with 2,000 staff in its Hong Kong, it supplies gas to 1.84 million households and businesses. It has another 700 employees in other businesses in the city, including liquefied petroleum gas vehicle refilling stations, aviation fuel supply, landfill gas utilisation projects, the installation of kitchens and gas appliances, data centres and telecommunications and even a restaurant with workshops to promote its appliances.

Since 1993, it has expanded aggressively across the border, and now has over 45,000 staff in over 220 projects covering gas distribution, water supply and sewage treatment and coal-to-chemicals.