Towngas raises fuel prices by 10 pc this year, currently in negotiation with the government

Hong Kong and China Gas Company (0003), or Towngas, is facing pressure to increase fuel prices by 10 percent this year and has already begun negotiations with the government regarding a price hike, said Peter Wong Wai-yee, executive director and managing director at Towngas.

Speaking at Towngas' 2026 annual general meeting, Wong said the ongoing conflict in the Middle East has driven up international energy prices. He stated that the company’s current feedstocks comprise 40 percent naphtha and 60 percent natural gas, but naphtha prices have doubled since the beginning of the year, while natural gas prices have remained stable due to a long-term agreement signed with Australia in 2006, which is set to expire in 2031.

Wong believes they will finalize the contract negotiations about three years before the expiry date, but assessing the new agreement’s pricing is difficult. Given the responsibility of China's three state-owned oil giants for natural gas supply, the company believes that, even in the worst case, China will definitely supply natural gas to Hong Kong.

Hong Kong has experienced extremely hot weather this year. Wong said temperatures in the first half were about 1.2 degrees Celsius higher than last year, reducing residential gas demand. He estimates a 3 percent decline in gas sales in the first half and a possible decline for the year, though less than 3 percent, as the recent recovery in the hotel and catering sectors slightly boosts consumption.

Wong noted that Towngas will issue bonus shares again if the company's financial performance improves. He explained that the company distributed HK$6.5 billion in dividends last year, despite its approximately HK$6 billion profit. Given the need for capital to develop new businesses and the uncertain political and economic environment, the company needs to maintain prudent financial management.

Don Cheng Hill-kwong, chief operating officer at Towngas, said the company has been actively expanding its hydrogen energy business in recent years. In addition to supplying hydrogen through its pipeline network, Cheng said Towngas has deployed hydrogen power-generation equipment at the CIC-Zero Carbon Park in Kowloon Bay, Pak Shek Kok in Sha Tin, and its North Point headquarters to supply electricity for electric-vehicle charging. He added that the company will also provide hydrogen for power generation at construction sites in Central and Shau Kei Wan.

Wong emphasized that he is very optimistic about supplying hydrogen for power generation at construction sites. He stated that Towngas can extract approximately 30 tonnes of hydrogen per day from its pipelines, which could supply up to half of Hong Kong's construction sites with hydrogen for power generation. Therefore, compared to vehicle charging, supplying hydrogen to construction sites is the top priority.

He is also optimistic about the development of the Northern Metropolis, with Towngas currently laying pipelines to meet the energy needs of the planned additional 1.5 million residents and commercial users in the Northern Metropolis development.
 

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