The Town of Tangyu, located approximately 58 kilometers from the Company's compressor station in Hongqing, is a major tourist attraction in Xi'an because of its numerous hot spring resorts, restaurants and hotels. With more than 2,000 years of history, Tangyu is a well-known spa resort in Shaanxi province and the focus area of tourism development in Lantian County.
The Company estimates that there are 50,000 residential and commercial customers, generating a potential annual demand of 8.5 million cubic meters of natural gas.
Mr. Qinan Ji, CEO and Chairman of the Board of China Natural Gas, stated, "We are very pleased to update our investors with today's announcement. We believe the exclusive relationship with the government of Tangyu reflects the solid track record of our natural gas distribution services and the strength of our brand. We are very optimistic about the market potential in Tangyu and remain confident that we will meet our expectations for the year 2008."
In addition to the development of the Company's piped natural gas business, the Company continues to witness favorable trends in its retail CNG stations and auto-conversion businesses, as evidenced by two recent natural gas-related regulatory developments enforced by the Dongguan City government and China's Ministry of Public Security, respectively.
In September 2008, the City Government of Dongguan announced the "Notice of Governmental Support for the Development of Natural Gas Vehicles" ("Notice") to support the development of CNG filling stations and CNG-powered vehicles in an attempt to improve its environment. Under this Notice, the City Government will provide a subsidy of RMB3,000 for every taxi manufactured or converted to a natural gas/gasoline hybrid and RMB500,000 for every natural gas filling station built between 2008 and 2010. The City Government expected to invest a total of approximately RMB 72 million in this initiative.
In October of 2008, China's Ministry of Public Security brought into force the Amended Motor Vehicle Registration Requirement, which altered the requirement of prior administrative approval for any alteration to the exterior, framework, or engine of a motor vehicle. Vehicle owners now only need to register the alteration afterwards. This has greatly simplified the vehicle alteration process for vehicle owners and laid the foundation for more development in the Company's auto conversion business.
Mr. Ji commented, "Dongguan, located in central Guangdong Province, is among China's top 30 cities in terms of economic strength and an important manufacturing and sourcing center for IT and IT related products worldwide. We believe the move taken by the City Government of Dongguan speaks to the fact that the Chinese government at various levels has started to recognize the benefits of CNG and are taking initiatives to support the growth of the industry. For example, similar regulations have been enforced in Guangzhou, Shenzhen and Hong Kong. We believe more cities will follow suit and are confident that China Natural Gas is well-positioned to be the primary beneficiary of this favorable market environment."
About China Natural Gas, Inc.
This press release may contain forward-looking statements. These statements are based on the current expectations or beliefs of China Natural Gas, Inc. management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including the fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies and our ability to penetrate the new markets.
Author: Jo Amey
