Gas deal 'could cut cost of power'

Power bills on Hong Kong Island and Lamma could be cut if hopes Hongkong Electric can secure a bargain deal to buy gas come to fruition.

The company and its gas supplier are negotiating to renew a short-term contract for the supply of natural gas from Shenzhen, which will expire next year.

A source familiar with the negotiations said the supplier, China National Offshore Oil Corporation (CNOOC) was ready to "substantially" reduce the price of gas to keep the contract, a source familiar with ongoing negotiations said.

But a source close to the power firm said it was more likely the pricing mechanism would be "maintained".

A spokeswoman for Hongkong Electric said negotiations were ongoing.

"Apart from fuel costs, the electricity tariff would depend on various influencing factors. Nevertheless, we are always trying our best to lower our fuel cost and purchase our fuel at a market-competitive price," she said.

CNOOC is said to be forecasting increases in the price of gas over the next two to three years, but expects prices to drop after that as global gas supplies increase, thanks in part to shale gas extracted by a controversial process known as "fracking".