Panva Gas Holdings Ltd, a gas distributor partly-owned by Hong Kong billionaire Li Ka-shing, has been taking advantage of the nation's eased control of gas distribution over the last three years and is now focusing on further expansion.

 

The company announced Tuesday its wholly-owned subsidiary company, Panriver Investments Co Ltd, has entered into asset transfer agreements with three Chinese companies.

 

With a total consideration of 124.8 million yuan (US$15.41 million), the company will acquire 100 percent of Shaoguan Keguang Piped Gas Co Ltd and 80 percent of Qingyuan Beike Languang Piped Gas Co Ltd.

 

The agreement holds a 30-year concession to operate piped gas business in both Shaoguan and Qingyuan, South China's Guangdong Province, a company statement said.

 

Both Shaoguan Keguang and Qingyuan Beike specialize in the development, construction and operation of piped gas and gas appliances.

 

Shaoguan Keguang had 31,840 residential users and 60 industrial and commercial users last year, and Qingyuan Beike had 7,546 residential users and 23 commercial users.

 

"The signing of new projects in Shaoguan and Qingyuan enhanced our market presence in the Guangdong gas distribution market and marked the successful execution of the 2005 business plan of adding six to eight new projects to the portfolio," said Chen Wei, managing director of Panva Gas.

 

Chen said this year Panva Gas would continue to expand its market reach with a dual focus on Liquefied Petroleum Gas (LPG) and piped gas business.

 

In November 2005, the company's first nine months turnover increased by 26.6 percent over the same period last year to about HK$1,622 million (US$210.65 million).

 

Net profit rose to about HK$219 million (US$28.45 million), representing an increase of 28.6 percent.

 

Securing joint ventures in China contributed to the growth, the company said.

 

Last April, Panva Gas entered into a joint venture agreement with Jinan Gas Co Ltd to establish Shandong Panva Gas Co Ltd, which holds a 30-year concession to operate the piped natural gas business Jinan of Shandong Province.

 

According to the agreement, Panva Gas will sink 192 million yuan (US$23.7 million) into the deal.

 

As the country encourages less gas use to cut pollution down, Panva Gas is competing with several rivals, including Hong Kong, China Gas Group (HKCG) and Xinao Gas Holdings, for capital investment

 

HKCG, Hong Kong's dominant piped gas distributor, has been pouring cash into the Chinese mainland's natural gas sector.

 

"We expect our mainland business to outstrip the local operation in the next decade," said Lydia Liu, Chief Representative of HKCG Beijing Representative Office.

 

Many gas distributors from Hong Kong are now paying their attention on the medium-sized cities, while some foreign fuel gas companies like Gaz de France are concentrating on capitals of China's large provinces.

 

(China Daily January 6, 2006)