Shenzhen sets up gas joint venture
By Wang Zhuoqiong (China Daily)
Updated: 2004-04-16 08:50

Shenzhen's dominant gas supplier, Shenzhen Gas Corporation Ltd, announced its debut as a joint venture yesterday with investment from a leading Hong Kong-based gas supplier and a domestic private company.

The Shenzhen municipal government has a controlling stake of 60 per cent in the joint venture through Shenzhen Investment Management Co, and The Hong Kong and China Gas Company Ltd (Towngas) holds 30 per cent, while New Hope Group, which is controlled by mainland tycoon Liu Yonghao, takes the rest.

The move is a result of the municipal government's efforts to restructure its State-owned Enterprises (SOEs) by attracting strong strategic partners from home and abroad through a tender in 2002.

Towngas and New Hope Group beat other strong bidders like BP, Hong Kong's Pava Gas and China National Offshore Oil Co to win a 40 per cent share in profitable Shenzhen Gas last July.

According to the deal, Towngas paid around 377 million yuan (US$45.5 million) to take a 30 per cent share of Shenzhen Gas, while New Hope Group acquired 10 per cent of the shares at a price of 125 million yuan (US$15.1 million). The operating period for the joint venture lasts 50 years.

"The participating of the two strategic investors is good for Shenzhen Gas to improve services and perfect its operation," Bao Deyuan, board chairman of the restructured Shenzhen Gas, told reporters at the launch ceremony yesterday.

Acquiring a 30-year sole franchising liscence for pipe gas supply from the municipal government, Shenzhen Gas grabbed most gas consumers in the local market of more than 300,000 households.

Alfred Chan, managing director of Towngas, said it will support Shenzhen gas in network development and safety technology. He added that its investment in Shenzhen Gas is only one part of their expansion plans on the Chinese mainland.

With 24 joint venture pipeline and gas companies on the mainland, Towngas, one of the largest gas suppliers in Hong Kong, aims to achieve a total revenue of 10.4 billion yuan(US$1.23 billion) from its mainland business by the end of 2008, up 62 per cent from 2003.

Towngas is planning to inject another 1.2 billion yuan (US$145.1 million) into eight new projects on the mainland by the end of the year, bringing total assets of all its mainland business to 5 billion yuan (US$604.6 million), according to company sources.