Key Takeaways:
Transport International Holdings (00062.HK) warned that a HK$1.8 billion government relief package will fail to cover the full impact of a nearly 200% surge in diesel prices, signaling sustained pressure on the city’s transport sector.
"My concern is: what mechanism do we have to stop oil companies from just eating up the subsidy?" Legco transport panel chairman Ben Chan asked, questioning if the relief would reach frontline operators. "If they keep raising fuel prices, how much help is HK$3 per litre really going to be?"
The Hong Kong government’s two-month emergency measures include a HK$3 per litre subsidy on diesel for commercial vehicles and a 50% toll discount at government tunnels. The plan was drafted after diesel prices rocketed from approximately $90 to $250 per barrel since late February, driven by the escalating conflict in the Middle East. Before discounts, a litre of diesel in the city costs around HK$34.97.
At stake is the financial viability of Hong Kong’s public transport and logistics operators, who face severe margin compression that could ultimately impact services. While the HK$1.8 billion package provides temporary relief, Transport International stressed the measures "will only partially offset the additional fuel costs," leaving the company to bear the severe impact of persistently high prices.
In its statement, Transport International, which operates major bus services, said its financial impact will largely depend on future fuel price changes and that it is formulating strategies to address the challenge. The government has also established a public transport task force to help operators manage costs.
However, the targeted nature of Hong Kong's plan has drawn scrutiny. Lawmakers have stressed the need for authorities to increase oversight of fuel market prices to prevent manipulation of the subsidy scheme. In contrast, Singapore has opted for a broader S$1 billion support package, including cash relief for platform workers and a 50% corporate tax rebate to ease business costs across multiple sectors.
Business and Professionals Alliance lawmaker Ray Wong, who welcomed the transport-focused subsidy, noted that other sectors are also suffering. "We have some members that mentioned to us, like the laundry industries and food delivery services, that they are facing a huge surge in operating costs," he said, urging the government to consider expanding the relief measures.
This article is for informational purposes only and does not constitute investment advice.
