State shares sold in Shenzhen
( 2003-07-30 07:18) (China Daily)
Shenzhen, China's pioneer of market economy reforms, yesterday sold some of the State-owned shares in a gas distribution company to a private Chinese mainland firm and Hong Kong & China Gas -- a dominant gas supplier in Hong Kong.
The US$60 million deal is part of the local government's massive reform to reduce its influence over State-owned utilities companies.
Under yesterday's deal, Hong Kong & China Gas paid around 377 million yuan (US$45 million) to take a 30 per cent share in the Shenzhen Gas Group -- the dominant natural gas supplier in the city. New Hope Group, which is controlled by mainland tycoon Liu Yonghao, bought 10 per cent of the shares at a price of 125 million yuan (US$15 million). The Shenzhen Investment Management Co, which represents the government to manage the State-owned assets, holds the controlling 60 per cent.
The operating period for the joint venture lasts 50 years.
The deal is the second one to be reached after the government announced its plan to sell off some State shares in five utilities firms covering water, food, electricity, gas and transportation.
In January, the local government sold shares of Shenzhen Energy, a major local electricity firm, to overseas listed Huaneng Power for 2.3 billion yuan (US$278 million).
Shenzhen Gas was a hot property on the market, after the government announced that its shares were up for sale. Major international and domestic firms, such as BP and Hong Kong's Pava Gas and China National Offshore Oil Co have shown a great interest in the purchase, in a hope to cash in on the rapid growth of gas consumption in the booming city.
More importantly, Shenzhen Gas controls 10 per cent stakes in China's first LNG terminal. Starting from 2006, the Shenzhen-based terminal will sell US$10 billion worth imported liquefied natural gas (LNG) to customers in energy-hungry Guangdong Province for 25 years, which is believed quite lucrative.
Hong Kong & China Gas has already holds a 3 per cent share in the terminal.
Optimistic about the prospects for the natural gas business on the Chinese mainland, Hong Kong & China Gas has poured billions of US dollars into gas distribution joint ventures in dozens of mainland cities.
It is said the company plans to invest up to 3 billion yuan (US$362 million) in gas projects over the next two or three years.
Li Heihu, president of Shenzhen Investment Management Co, said the sale of the shares not only brings in fresh capital to sustain the development of Shenzhen Gas, but brings in know-how to help the company grow into a top-notch international utility company.
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