A proposed government subsidy on diesel fuel for commercial vehicles and vessels is a reasonable step to cushion the broader economic impact of rising energy prices, a key advisory body said Friday, as lawmakers began scrutinizing the plan.
The government has proposed a HK$3 (38 U.S. cents) per litre subsidy for diesel over two months, part of a package aimed at supporting industries hit by a recent spike in fuel costs linked to tensions in the Middle East.
Simon Wong, chairman of the Energy Advisory Committee, said prioritizing the transport sector made sense because higher logistics costs tend to ripple through the wider economy.
“In this situation, I think it is reasonable to prioritize the transport sector,” Wong said on an RTHK radio program. He added that industries such as retail, catering and even laundry services would benefit indirectly, as transportation costs often feed into consumer prices.
Wong also noted that the measure came earlier than expected, given the government’s limited fiscal surplus.
The proposal will be reviewed by the Legislative Council starting Friday afternoon.
Transport sector representatives welcomed the move. Stanley Chaing, chairman of the Lok Ma Chau China-Hong Kong Freight Association, said the subsidy would help ease mounting pressure on operators, who have faced an increase of about HK$8 per litre in diesel costs since mid-February.
He said the subsidy would offset nearly 40 percent of that increase.
However, Chaing urged authorities to monitor oil companies closely to prevent them from raising pump prices as the subsidy takes effect. He also noted that while the industry had initially pushed for a full waiver of tunnel tolls for commercial vehicles, the government’s proposal to halve fees was acceptable.
Major bus operators Citybus and KMB said the subsidy would provide short-term relief as refined oil prices have roughly doubled in recent weeks. But they warned that longer-term measures would be needed if high fuel costs persist.
Wong said imposing a cap on fuel prices was not necessary at this stage, citing concerns over market distortions and potential risks to energy supply in a market dominated by a small number of oil companies.
Authorities have yet to announce details on how the subsidy will be distributed.
