LegCo approves $1.8 billion diesel subsidy to ease cost pressures

Hong Kong lawmakers have approved an emergency funding allocation of HK$1.8 billion to provide a temporary diesel subsidy aimed at easing cost pressures on transport and industrial sectors.

The measure, endorsed by the Legislative Council’s Finance Committee, will offer a subsidy of HK$3 per litre of diesel for two months, covering commercial vehicles, vessels and relevant industries reliant on diesel fuel.

Deputy Financial Secretary Michael Wong said the move was designed to target sectors most affected by fuel price fluctuations, particularly those tied to public services.

He noted that private cars were not included, as their use involves individual choice and alternatives are available, adding that the measure is temporary and time-limited to avoid placing undue pressure on public finances.

During the meeting, lawmakers raised concerns over whether oil companies might benefit disproportionately from the subsidy.

Secretary for Environment and Ecology Tse Chin-wan said the government would closely monitor fuel pricing data to ensure the subsidy is not absorbed by suppliers.

He said fuel price increases should not exceed the rise in underlying costs, and pledged that prices would reflect the impact of the subsidy. The government will also engage with oil companies on implementation details.

Tse rejected suggestions that fuel companies had accelerated price increases or delayed price reductions, citing previous investigations by the Competition Commission that found no evidence of collusion.

He explained that retail fuel prices are not directly tied to crude oil prices, noting that while global crude prices had recently fallen from above US$120 to around US$90 per barrel, this did not necessarily translate into immediate local price reductions.

Lawmakers also questioned whether the subsidy could be increased if international fuel prices continue to rise. Wong said the HK$3 rate has been fixed, and any adjustment would require further discussion at the Finance Committee.

He added that the subsidy would not be applied retrospectively.

Some legislators expressed concern that the subsidy level may be insufficient. Lothair Lam Ming-fung, representing the transport sector, said the HK$3 subsidy accounts for only about one-third of the fuel price increase, describing it as limited relief for operators.

Wong responded that the subsidy is intended to share the burden rather than fully offset rising costs, noting that it would be difficult for public funds to cover the entire increase.