Hong Kong Electricity Providers Reach New Regulatory Deal With Government

Hong Kong's two electricity providers have reached a new regulatory agreement with the city's government that lowers their permitted returns.

CLP Holdings Ltd. (0002.HK), Hong Kong's largest electricity provider controlled by the wealthy Kadoorie family, said after markets closed Tuesday that its unit CLP Power Hong Kong Ltd. signed a new scheme-of-control agreement with the government, effective October 2018 through December 2033.

Under the new 15-year agreement, the permitted return of its Hong Kong electricity businesses will be reduced to 8% from 9.99% currently, CLP said. It said its Hong Kong power operations' contribution to total operating earnings will drop once the new deal takes effect.

HK Electric Investments Ltd. (2638.HK), which provides electricity on Hong Kong Island and Lamma Island, signed a similar deal with the Hong Kong government. Its permitted return will be reduced to 8% from 9.99% beginning January 2019 for a term of 15 years. HK Electric counts Power Assets Holdings Ltd. (0006.HK) and Qatar's sovereign-wealth fund Qatar Holding LLC as its shareholders.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

April 25, 2017 06:50 ET (10:50 GMT)