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Increase transparency sought from gas company
Proposals for the Hong Kong and China Gas Company to be more transparent with its justification for tariff increases and for a new Energy Advisory Committee are contained in a report published by the Government today (Monday).
These proposals are made in response to the Consumer Council's study on the competition in the domestic water heating and cooking fuel market.
Explaining the proposals before the LegCo Economic Services Panel this afternoon, Deputy Secretary for Economic Services, Mr Leo Kwan, said: "The Government's response has been prepared on the basis of a detailed analysis of the Consumer Council's Report and public comments on it.
"The Government is fully committed to the promotion of fair trade and competition and subscribes to the view that market forces and minimum Government intervention is the best formula for enhancing competition on the one hand and keeping costs and prices down on the other.
"However, where necessary, the Government will use appropriate and pragmatic measures to rectify any unfair business practices, safeguard competition and protect consumer interests and this approach has been adopted by the Government response to the gas report."
In its report, the Consumer Council proposed that the Hong Kong and China Gas Company should be subject to some form of regulatory control.
The Government's analysis concludes that, over the past decade, the gas company has achieved high profitability and that its market share has grown significantly.
Over the same period, the price of towngas has been higher than that of piped LPG but less than that of electricity and cylinder LPG, indicating that the company is operating in a competitive environment, with electricity tariffs acting as a check on towngas tariffs.
The Government's response concludes that regulation of the company is unnecessary as its rates of return are broadly in line with the two power companies (which operate under Schemes of Control) and there is no evidence that it is abusing its dominant position in the domestic gas market.