Hong Kong and China Gas (Towngas) is in discussions with the government about raising tariffs, which could be its first in two years, amid growing pressure to deliver returns to shareholders.
“We have communicated with the government and submitted our opinion [about lifting gas tariffs],” Peter Wong Wai-yee, managing director of Towngas, said at a media briefing after the annual general meeting on Tuesday. “It will be reasonable, and it will not be a double-digit increase.”
He added there was no timetable to raise tariffs, and that it was subject to the government’s approval.
The utility’s annual dividend payout has remained unchanged for the past three years at HK$0.35. The final dividend for 2023 will be paid on June 24.
Gas sales in Hong Kong fell 2 per cent in the first three months of the year because of above-average temperatures in the city, Wong said. But, he expected volumes to commercial customers to increase overall this year because of a rebound in the aviation industry.
Towngas expects capital investments of HK$7.5 billion (US$960 million) this year, versus HK$10.2 billion in 2023. These will be mainly made in new energy, said Edmund Yeung Lui-ming, executive director and chief financial officer, at the media briefing.
Hydrogen will also be a key focus area for Towngas’ new energy business going forward.
“For the past 160 years, half of the gas that Hong Kong residents have been using in their homes has been composed of hydrogen,” Wong said, noting that the gas can be extracted through a hydrogen extraction facility from its existing gas network in the city.
As a result, the cost of procuring hydrogen would be relatively low, he added.
Towngas is also exploring the possibility of turning hydrogen into energy through fuel cells, which could be used to as an energy source in Chinese regions without ample access to electricity, Wong said.
Citybus is expected to introduce at least five hydrogen buses in Hong Kong by the end of the year.