Hong Kong will pay diesel subsidies directly to oil firms, look out for abuse Hong Kong will directly pay diesel subsidies to local oil companies based on sales volume after lawmakers approved a massive HK$1.8 billion government scheme to ease rocketing fuel prices for the transport sector over the next two months. The city’s environment minister maintained that a mechanism would be in place so the government could “know” and “monitor” if the oil companies tried to abuse the scheme by increasing prices, but did not say how. Senior government officials briefed lawmakers at a Legislative Council Finance Committee meeting on Friday regarding the HK$1.8 billion emergency funding request for the diesel subsidy scheme, set to launch late this month. Officials said the subsidies would not be backdated, despite the funding being approved on Friday. Many local firms are reeling from the sharp rise in global oil prices since the United States and Israel attacked Iran on February 28. Under the scheme, the government will offer a subsidy of HK$3 per litre of diesel for two months to support public and commercial vehicles and vessels that use the fuel. Private cars are not covered. Acting financial secretary Michael Wong Wai-lun said the government aimed to help “operational sectors involving public services” that were most severely affected to ensure prudent use of public money. Asked how the subsidies were to be paid and to whom, Secretary for Environment and Ecology Tse Chin-wan said: “Basically, oil companies will [apply] and the government will pay them the subsidies in accordance with the volume of diesel oil they have sold. “They will be required to prove they have sold that much before the government will pay them.” Many lawmakers at the meeting raised concerns that oil companies could take advantage of the scheme and called for price controls during the two-month period at least. Tse argued price controls were not in line with Hong Kong’s market economy. “The government can have access to oil price information to ensure the oil companies will not eat up our subsidies,” he said. “Oil companies may increase prices [during the subsidy period] but we will know if the price increase is reasonable or not.” He added that the government would not allow the companies to increase prices “more than what is needed”. He also said that even if oil prices dropped soon, the subsidy scheme would remain for two months. All 54 lawmakers who spoke during the two-hour meeting backed the scheme, which was subsequently approved by a show of hands. Meanwhile, Stanley Tandon Lal Chaing, chairman of the Lok Ma Chau China-Hong Kong Freight Association, welcomed the funding’s passage and said he believed the scheme could alleviate the sector’s burden. But he urged the government to keep a close watch on the oil companies to avoid them eating up the subsidy. He said independent drivers currently paid up to double the fuel costs compared with large fleets, which enjoyed major discounts through card memberships, creating a deeply unfair market. “We are very worried about this … because oil companies have different discounts, and the government has no way to monitor how they distribute them,” he said. The US-Israel strikes against Iran on February 28 have escalated into a regional war, choking the critical Strait of Hormuz and pushing diesel and petrol prices in Hong Kong to the highest in the world. The fuel shock sparked panic across the commercial transport, construction and laundry sectors. The government on Thursday announced the diesel subsidy for public and commercial vehicles and vessels, alongside a 50 per cent tunnel toll reduction for non-private vehicles, also for two months. Energy Advisory Committee chairman Simon Wong Kit-lung warned against establishing price controls, noting that international oil suppliers could simply abandon the local market and leave the territory without sufficient petrol. https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3349614/hong-kong-government-must-guard-against-exploitation-diesel-subsidy-experts-warn?module=spotlight&pgtype=section (ICE HONG KONG)

Fonte notizia: South China Morning Post