Lawmakers on Friday approved a HK$1.8 billion relief package to help businesses cope with rising fuel costs caused by the Middle East conflict.

Starting later this month, diesel-powered commercial vehicles and vessels will receive a HK$3-per-litre subsidy for a period of two months.

The appropriation was passed following a two-hour Finance Committee meeting on Friday.

During the meeting, legislators largely welcomed the move, citing the need to ease the financial burden on the industry.

However, many also voiced concerns as to whether there were relief measures to help other industries that also rely on diesel.

In response, Secretary for Environment and Ecology Tse Chin-wan said the relief package wasn’t just for the transport sector.

“Of course, our initial consideration was for vehicles. However, we have noticed that the surge in diesel prices has affected various industries,” he said.

“Therefore, this subsidy will cover all industrial and commercial sectors that use diesel, except for power and gas companies. As long as they genuinely use diesel, they will be eligible for the three-dollar-per-litre subsidy."

When asked how officials would ensure that oil companies do not take advantage of the subsidy and raise prices to turn a profit, Tse said the administration would collect information from oil companies, including the costs of purchasing refined oil products, to ensure the subsidy is reflected in the retail price.

On whether the government would conduct a study on regulating fuel prices, he said Hong Kong is a market economy and any sudden change to that would affect the supply.

He also said his bureau and the Competition Commission had conducted various market research in the past and did not find evidence of price-fixing among oil companies.

Asked if the scheme would end earlier if Middle East tensions de-escalate, Acting Financial Secretary Michael Wong said the two-month scheme would stay in effect even if global prices drop, calling it a reasonable way to manage an ever-changing situation

The government also doesn't plan to backdate subsidies to cover the high diesel prices in March, he added.

Wong stressed the subsidies mainly focus on the transport sector given that it is most severely affected and involved in the provision of a public service, adding that the move is also a prudent use of public funds.

Aside from the diesel subsidy, tunnel tolls for commercial vehicles – excluding private cars and motorbikes – would also be halved during the period.


Edited by Tony Sabine