HK Electric CEO admits cost pass-through but denies profit from fuel surcharge jump

The Middle East conflict has forced HK Electric to pass soaring fuel costs onto customers, but the impact on household budgets will remain minimal, Chief Executive Officer Francis Cheng Cho-ying said on Sunday after the company raised its fuel surcharge for the second consecutive month. 

Speaking on a radio program, Cheng explained that Qatar and Australia were previously the power company’s two biggest liquefied natural gas suppliers. Following the Middle East conflict, gas facilities in Qatar were severely damaged, halting scheduled shipments. 

Meanwhile, suppliers in Australia have defaulted on long-term contracts under various pretexts to prioritize lucrative spot market sales. These supply gaps have forced HK Electric to purchase gas on the spot market, causing procurement costs to skyrocket exponentially. 

Addressing public criticism over transferring the entire financial burden to residents, Cheng stressed that HK Electric does not profit from the surcharge. He said the company is merely recovering actual costs, noting that a private enterprise cannot entirely absorb extreme price fluctuations alone. 

He added that the surcharge had been lowered for half a year before the outbreak of the Middle East conflicts, which prompted the recent upward adjustments. He said due to a “lag effect,” the current charges do not yet fully reflect the latest changes in fuel costs, meaning the fuel adjustments could persist for several more months. 

He also highlighted that HK Electric maintains a tiered tariff system alongside support measures for vulnerable groups such as subdivided flat tenants. 

Cheng revealed that the Qatari supplier recently offered to divert gas from other regions, with long-term contract pricing expected to resume by mid-to-late July at rates cheaper than spot market prices. Still, he warned that as the situation in the Middle East presents ongoing uncertainties, there is no guarantee when the scheduled gas will be delivered.

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