Thank you everyone for attending this meeting. We are about to get started. Welcome to China Gas FY 2021-2022 annual results announcement. Now you're all muted. We'll leave some time for you to ask questions. Dear investors and analysts, welcome to China Gas FY 2021-2022 annual result announcement. First of all, let me introduce the management. From Shenzhen venue, Mr. Liu Ming Hui, Chairman, Managing Director and President. Mr. Huang Yong, Executive Director and Executive President. Mr. Kevin Zhu , Executive Director and Managing Vice President. Ms. Kathy Liu , Executive Director and Vice President. From Hong Kong, Mr. Frank Li, Vice President. Now I'll pass the floor to Mr. Liu for a speech.
Dear investors and finance managers and analysts, and everyone who has shown interest and support for China Gas. Good afternoon. It gives me great pleasure to meet you here in our annual result announcement for FY 2021 and 2022. In the past year, we tackled many challenges. The economy faced severe challenges, and the pandemic posed severe difficulty for everyone. The staff of all across our group assumed their responsibilities and delivered great performances. Today, here, the management team will present to you our business performance to everyone who cares about China Gas. Now, I'll hand over the floor to Kevin, our COO, to disclose our business performance for the past fiscal year. Thank you.
Ladies and gentlemen, today I will talk about four things, operational performance, financial performance, carbon peak and neutrality and new energy, and our new dual carbon goals, carbon peak and neutrality and new energy businesses, and high quality and sustainable development. Now, natural gas. The city gas business and rural coal-to-gas projects grew steadily in terms of sales volume. The total volume increased from 31.2 BCM to 36.703 BCM, up 17.6%. We can break it down into two parts. The first part is the gas sold through end user market. The city and township gas accounts, it increased 18.2% from 12.5 BCM to 14.7 BCM. The figure for direct supply pipelines and trade increased from 18.699 BCM to 21.919 BCM, up 17.2%. In terms of sales breakdown, city.
In city and township gas, residential users account for 33.6%, commercial 13.5%, industrial 49.3%, CNG and LNG stations account for 3.7%. We can also look at the volume growth rate by users. Residential went up by 20.4%. The figure for industrial users was up by 19.8%, commercial 15.7%, and the figure for CNG and LNG stations went down by 20.7%. This year, we have a total of 660 projects for piped gas with concession rights, and we also have 2.94 million new residential connections and 34,000 new industrial and commercial users. In terms of LNG, the sales volume also grew steadily.
In terms of total sales volume, it hit 3.61 million tons, up 7.1%. How do we achieve that? Well, first of all, we strengthen partnership with Chinese oil majors, PipeChina, and LNG importers. We work closely on LNG terminal and pipeline delivery windows, logistics, storage, transport, and exchange of LNG and piped gas resources. Currently, China Gas is also CNOOC's largest LNG distributor. We have built a joint venture in Guangdong Province, focusing on LNG distribution, where China Gas holds 60% of the shares. We also optimized and expanded nearly 10,000 LNG road transport routes. Now we have China's largest hazardous goods truck fleet. Apart from that, we have also been expanding our retail market by supplying LNG to nearly 1,000 external industrial users, commercial users, and third-party city gas companies.
We have also become one of China's largest LNG distributors. We also plan to distribute 4 million tons of LNG in this upcoming fiscal year. This year, the revenue from natural gas sales grew rapidly. However, the gross profit and EBIT didn't grow as fast. Let me explain. The LNG trade relied on sales amount. The sales from LNG accounted for 37%, bringing about HKD 15.3 billion of revenue. The volume of LNG sales grew more rapidly than its revenue growth. This is because of the price hikes in the past year. That is for LNG trade. We have also set a target for the next five years, that is to reach LNG import of 5 million tons in five years.
To achieve that goal, we will increase our delivery window periods co-collaboration. We have been working together with oil majors and PipeChina, and have become PipeChina's shipper. We've also signed an agreement with Beiran Group , and have thus obtained a stable unloading window period at Tianjin Nangang LNG Terminal. The other measure is that we will continue to enhance our strength in international imports. We have been diversifying our import sources and have been working together with many overseas companies to obtain premium long-term contracts to build our own LNG resource pool. We have made positive progress recently. We have disclosed that we have signed a 25-year supply and purchase agreement with Energy Transfer to import LNG independently annually. The amount of import every year will reach 700,000 tons.
These were the measures that we undertook to increase our LNG import in the past year. Now, natural gas tariff and dollar margin. Last year, the residential gas sales price increased from CNY 2.54 to CNY 2.65, and the figure for industrial users increased from CNY 2.56 to CNY 3.01, and the commercial price increased to CNY 3.18, and the figure for LNG and CNG stations was CNY 3.51. The average selling price was CNY 2.95, and APUC was CNY 2.45. The average dollar margin for city and township gas projects combined was thus CNY 0.5, down from CNY 0.59 of last year.
The reduction of dollar margin was more marked in the second half of the fiscal year because the prices in the second half, the winter season are higher. The main reason was that in the last winter, our contract-based volume accounted for 92%, and LNG, CNG, and other non-contract-based gas prices increased substantially at city gate, increasing by almost 50%. That makes gas procurement more expensive. The price difference of pass-through has been facing some challenges. We have passed through 65% of our gas sales. On the upstream supply. Suppliers didn't provide us with enough gas for daily life, so we had to use some of their gas from residential users for residents. We purchased 8% of our gas come from unconventional sources such as LNG.
Given the high price hikes, we have faced reductions in dollar margin. That's for dollar margin. What will China Gas do, and what have we been doing to stabilize dollar margin? Well, there are two types of scenarios. First of all, we will expand our contract-based supplies. We have been doing that [audio distortion] actually. And secondly, we have been and will continue to offset price hikes. And for our contract-based supplies, first of all, we will sign full contract, full volume contracts for daily- life gas supply. You may have noticed that the NDRC has released the Notice on Ensuring the Signing of Mid and Long-term Natural Gas Contracts for 2022. This document stipulated that, gas suppliers and distributors should sign separate contract for daily life gas. We aim to obtain all of the daily life gas through these contracts.
For non-daily life gas, we aim to also strive to sign separate contracts.
What measures have we done to offset the price hikes? First, we wanted to engage in price pass-through. We have required all project teams to have these price pass-through policies across the localities. For example, in Shandong, Guangxi, Inner Mongolia, in these regions, they have introduced the natural gas prices for non-heating seasons, so they allow us to have price pass-through. Our measure is to accelerate the implementation of these policies so that we can pass on the price hikes to the end users as soon as possible. Secondly, we tried different measures to lower gas transport cost. For example, in Hebei NDRC, they have taken measures so that they can lower the gas transport cost within the province, down by CNY 0.12 .
However, even it's a minimum reduction, this saves more than HKD 50 million transport cost for our operations in Hebei, and that will also enhance our dollar margin eventually. The third measures we take is for residential users. Gas procurement cost increased. We have taken major moves, including first, we maintain winter prices for non-residential users for a longer period of time. That means in Hunan, Hebei, and several other provinces, they have introduced the policies on non-residential users to maintain the winter prices for a longer period. Secondly, increased price markups over non-residential users so that we can offset the reduction for the residential users in the dollar margin. For example, in Fujian, they have introduced measures to increase price markups for non-residential users also. When we do cost review, we require our local team to incorporate pass-through delays.
For the pass-through delays, we have to incorporate into our cost reviews. For example, in Maoming, we have taken such measures. Number four, we also are committed in implementing the government subsidies for residential gas prices. We know that the government has had provisions for the residential gas prices, including in places like Huzhou, Jinhua, Taizhou cities in Zhejiang Province, Huanggang, Shiyan in Hubei Province. Local government have all introduced subsidies for residential gas prices and also in Shandong Province as well. For non-residential users gas cost increase, we have required our practitioners to charge according to the market procurement cost.
Of course, there are policy support as well. For example, in Shandong, they have had policies allowing us To have increased cost and then pass that on to the end users, so that we can allow the price alignment for the upstream and downstream. For example, in Anhui, Jiangsu, these provinces, they have policies supporting such moves. We have required our local team to take various measures to accelerate the implementation of these latest policies to stabilize dollar margin for residential and non-residential users. That's our measures to offset the price hikes. Now let's move on to the natural gas user statistics. Now we can see that for residential users, connections 2.94 million, comparing with FY 2020, 5.04 million, down by 41.7%. Total portfolio is 43 million households. In breakdown, this includes city gas project users.
New connections is 2.66 million, comparing with 3.36 million last financial year, down by 20.6%. For rural coal-to-gas projects, from previous 1.687 million, down by 83.8%, reaching 273,000. These two parts together constitutes 2.94 million for residential connections. You also see the year-on-year decrease, mostly because of the decline in rural coal-to-gas projects connections. As I previously said, for this part, we want to take a prudent policy. We require all the companies to improve the quality of the project, to pay attention to the cash collection. If there's a project, not so ideal, we will not make further investment. That's why for rural coal-to-gas, there was a major decline.
For industrial users, actually, in last fiscal year, increased from 2,368 to 2,762, up by 16.6%. For commercial, we actually have grown by 4.8%, reaching 31,000. For CNG and LNG stations, in FY 2021, we closed 24 stations, making the total stations 533. Among which industrial is 19,800. Commercial almost reaching 300,000. You can see that the connection fee actually maintained quite stable for years. FY 2021 to 2022. For city gas projects, the average connection fee is CNY 2,457 per household. For rural coal-to-gas, CNY 2,945.
The connectable residential users now reaching 43 million with a penetration rate of 65.2%, comparing with FY 2020, improved by 4.4%. Here you see the natural gas location with the project locations, and I will not deliberate here. Now let's talk about VAS, value-added services. In the past six years, the VAS aggregated growth rate actually is very high. In FY 2021, the revenue for VAS from previous HKD 7.7 billion, down by 11.9%, reaching HKD 6.79 billion. Gross profit up by 13.2%, reaching HKD 3.3 billion. Profit before tax up by 7.4% from previously HKD 2.3 billion, reaching HKD 2.49 billion.
Among which you can see the VAS business in the second half of last year was impacted by multiple factors, resulting in the year-on-year decrease in the revenue. You see that, profit before tax also increased much slower than the previous year. Also, the same is true for gross profit. However, you can see that, the GP margin actually is increased to 48.6%, and pre-tax profit margin also increased to 36.7%. You probably wonder what happened in second half of FY 2021. You can see that VAS previously account for 54%-57% of our total business. If you look at the second half of, last FY year, we have multiple factors.
First, pandemic, t he resurgence of the pandemic has impacted 32 key businesses about 2-3 months, resulting in the decline in revenue for about 10%. You see major cities like Shenyang, [Hohhot], Harbin, Nanjing, Baotou, Hangzhou, all these major cities have had lockdowns for about three months long. These cities are where we have major contribution for the value-added services increase. All these core cities have been hit hard by pandemic. In addition, real estate market is a big factor. From October to December, the project kickoff rate down by 13%. For the new connections in relation to real estate, especially the value-added services, the range hood revenue down by HKD 237 million, accounting for 8%. Also, in FY 2020 ended March of 2021, the sales of the wall-hung boilers.
However, in this FY 2021, the sales actually declined, resulting in HKD 900 million decline in our revenue. Profit margin also declined, and gross profit declined HKD 200 million. All that resulted in the performance of value-added service in FY 2021. Of course, the largest factor is the pandemic, plus the wall-hung boilers, plus the impact from real estate market. That's why in second half of last year, you can see the performance of VAS in terms of gross profit and profit before tax. Why did we improve the GP margin? Because the wall-hung boilers in the previous breakdown of revenue, the profit margin was quite low for kitchenwares. About 20% were traditional, like household alarms and other range hoods, average margin at about 40%.
In addition, the household alarms, the insurance and corrugated pipes, they have a higher margin. That's a structural change. Of course, I know that you pay attention to smart living versus the traditional city gas project. You can see, at the end of 2021, FY 2020, in terms of the VAS profit before tax, you can see that the percentage has increased to 25.2% from previously 19.3% for FY 2020. We also talk about the spin-off for brand value. In order to boost the shareholders' return, we have major strategies, including the New Retail 3.0, 3x3x3 new grid model.
Now let's break Value-Added Services down. What will be the new growth drivers for Value-Added Services in the future? The first one is safety business. Last year, the gross profit of safety businesses increased 32% to HKD 1.03 billion. In this upcoming years, this figure is expected to grow 20%, which is relatively fast. Now, how will we do that? First of all, we will develop a portfolio of safety products. We have been hiring teams for safety product development and enhancing our marketing solutions. This includes following users' needs to develop safety products and carrying out household safety checks. We will develop tailored, customized safety solutions to our users. We have also been developing probe detectors for leakages to safeguard commercial premises. We have also been expanding our commercial safety products.
We have also been developing community safety products such as Smart Cat Eyes and locks. Home safety, commercial premise safety, and community safety are going to comprise our targets.
In terms of insurance, the gross profit last year increased to HKD 196 million, up 37%. In this upcoming fiscal year, the gross profit will grow by 100%. We will obtain safety check credit credentials, hire professional teams, and build up our capacity for claim settlement, set up branches across China, and offer integrated insurances and extension services for industrial, residential, and commercial users. Across the country, we have set up 17 regional subsidiaries, and the figure will double this year. Apart from China Gas's project companies, we will also expand into the public domain in FY 2022. We have also been developing other insurance products such as staff welfare products, car insurances.
In terms of customers, we have also been developing businesses related to insurance premium, and also we have been developing our businesses in agriculture. There are many types of businesses that the insurance covers. We'll continue to adopt these to launch these new businesses in the upcoming fiscal year. We'll also deploy for online businesses. These strategies will facilitate our growth in the new year. The third component for VAS is the kitchen products. The gross profit last year increased 13% to HKD 520 million. For this upcoming year, the gross profit is expected to grow 30%. We will enhance marketing capacity and refine management of our teams. We will also categorize our project companies and do better jobs in marketing.
We will emphasize the concepts of safety and efficiency and green life and energy saving to reinforce our brand's image as the gas appliance safety expert. We'll also speed up the development of new products to expand our market. We have also been developing commercial products, and we have high hopes for this product line. This market will exceed HKD 100 million. We'll develop water heaters, purifiers, and kitchenware. For smart living, our profit before tax increased 40% to HKD 630 million, reaching our target. This upcoming fiscal year, we expect to see this figure to double, meaning that it'll hit HKD 1.24 billion.
The measures will include enhancing management for existing users, and we'll also direct public domain traffic via multiple channels. We'll rely on the three mutually reinforcing interconnected grids to achieve this purpose. Let me just briefly talk about the three grids that I had covered previously. What are the three grids? They comprise of public utility basic grids, empowerment grids, and community grids. They're interconnected and mutually reinforcing. The first grid focuses on gas users and provide basic life services for. On this basis, we'll build the empowerment grid. Here, we will utilize the empowerment of customers and develop KOC and train the KOC to create value for us. On top of that, we'll build the community grid.
Relying on the operation of KOC and the big data analysis, we will carry out user fissioning and carry out fission marketing. Based on these interconnected, mutually reinforcing grids, we will develop the grid base, the private domain, new retail, and we will attract traffic from the offline grids. The private domain, with the grids represent offline world and the, we'll also do businesses online. We'll combine these two parts to develop this new business strategy. That's a very brief introduction of this strategy, and we will rely on this strategy to expand our market. We are also building upon our New Retail 3.0. We have been operating the communities, cities, and expanding into new domains.
We all of these preparations have been completed and we have achieved good connectivity between frontend, mid-end, and backend. What we're hoping to do with this preparation is to enhance our operational models and build new community operational models. Enhance our product sales. Later, we will brief you on the development of the New Retail 3.0. That's a brief description of the performance of the Value-Added Services and its business strategies. Now let's talk about LPG. China Gas is the only operator with resources and distributor networks at the same time in China. Our business strategy is to integrate procurement and sales and connect the up, middle, and downstream sectors to boost synergy and LPG sales. Last year, the LPG volume did not increase substantially.
That was because the three storage projects at LPG ports didn't go into operation. When they are launched, they will increase annual sales by over 3.5 million tons. The operating profit decreased from HKD 417.8 million to HKD 142.8 million. The main factor was the international crude oil price hikes. This caused a 70% increase for LPG procurement cost. The operational fees also increased in terms. During the pandemic, many subsidies for LPG purchases were canceled, and that posed a small challenge for us. In the upcoming fiscal year, we will increase the sales volume because our collaboration with deep processing companies have already borne fruit.
For example, in Taixing, our project for the port storage will start operating soon this year, and it'll increase sales by over 800,000 tons a year. Because the storage facilities will expand our residential and commercial LPG market. In Fujian, we have also signed a 10-year storage contract with Grand Pacific Petrochemical Corporation, which will lock in 700,000 tons a year of sales for us. This project will go into operation in October this year. In Dongying of Shandong province, we have also been working on a project for port liquefied hydrocarbon storage. It'll go into operation in 2023 and will increase LPG sales by 600,000 tons. We expect to boost the sales of LPG to 10 million tons a year within five years.
In the past few years, although the LPG sales volume didn't increase substantially, we have been undertaking a lot of good projects that will help boost the sales in the future. We have also listed specific measures to boost supply. First of all, we have been working together with the domestic oil majors and traders in the upstream sector, and to increase domestic gas sourcing. In the midstream, we have been exploring opportunities to replace LNG with LPG. Because after LNG prices rose significantly. There's a market for expanding LPG. Because this can provide users with lower cost options. In downstream sectors, we will expand proprietary distribution channels and enhance our sales networks. We will expand our fuel truck networks and improve fuel truck capacity planning and scheduling.
That's for LPG.
Let's now move on to urban heating. In urban heating, you can see we have 3.16 million sqm of connection area. We can see the project numbers increased from 28 previously to 47. Of course, you know about the fee charging model, so I will not iterate here. In the past one year, you can see our urban heating business have taken major strategies. For example, we have seized key markets and regions in China, including new provincial capitals and municipalities, 58 prefecture cities, and 53 top 100 counties. We have seven provinces and two municipalities as our key regions. We have signed contract with nearly 40 cities, covering more than 350 million sqm of area, more than 31 cities.
In market demand, in market-based model, we also have covered on the villas, communities working with regional developers. By market-based model, we wanted to drive the revenue growth. In financial year 2021, 2022, we signed deals with 17 big property development companies for sufficient space for centralized heating. Also, we have some smart energy strategies in combination with urban heating. We use comprehensive solutions, including the clean energy like PV, green power, natural gas, and other fuels to make ourselves more competitive to assist governments in building zero or low carbon communities. If you look at the connection area, 3.16 million square meters actually failed to deliver our expectation, but that is the result of the impact from COVID-19, just like value-added business.
We aim at the seven provinces and two cities down the Yangtze River, and because of the hit of COVID-19, we weren't able to access the communities for underground construction. That's why we cannot confirm more connection area. That's for urban heating. Let's now move on to our financial performance. Now, let's talk about income statement revenues. You can see that revenue totaling HKD 88 billion increased by 26.1%. Natural gas sales, HKD 50.5 billion, up by 40.6%. I also talked about the LNG in the previous part. Connection fee, HKD 7.22 billion. With the decline in new connections, the revenue also declined by 42.1%. LPG sales increased by 75.3%. VAS, about HKD 6.8 billion. Construction design services totaling HKD 588 million.
Overall gross profit, HKD 15.7 billion, down 13.1%. Profit attributable to owners of the company, HKD 7.66 billion, down 26.9%. EPS basic, HKD 1.39. After one-off or non-operational items deduction, including the gains and losses from others and the foreign exchange gains and losses from share of results of associate Zhongyu Energy. After deduction, the core profit is HKD 8.05 billion, down 22%. After approval of the board meeting, the full year dividend per share is HKD 0.55. Payout ratio 39.5%. According to core profit, 36.6%. That's all for the income statement. Now, let's look at the balance sheet. Total assets in FY 2021, HKD 163 billion. Total equity, HKD 72 billion. Shareholders equity, HKD 63 billion.
Cash, HKD 10.1 billion. Short-term borrowings, HKD 22 billion, and long-term borrowing, HKD 34 billion. Net debt to asset ratio, 64%. That, of course, is exclusive of trade facility in relation to LPG business as we've done in the past. Let's look at cash flow. You can see that, net cash from operations actually increased versus FY 2020, reaching HKD 9.86 billion. However, you can see net cash from investment actually increased. There are multiple factors totaling HKD 12 billion. You can see PPE, property plant and equipment, didn't actually increase that much. We have some special factors here. First, our group office building, about HKD 1.37 billion. Rest of payment, almost all paid off. Increase of investment in JV and associates increased, reaching HKD 2.05 billion.
As you see from the cash flow, this number is actually much higher, almost reaching HKD 3.1 billion. That's HKD 3.1 billion increase, deducting HKD 510 million from the revenue of associates, and then the rest, HKD 400 million for the foreign exchange loss and gains. Because over the last two years, the changes of foreign exchange rate in FY 2021 versus FY 2020, there is a change of foreign exchange rate for about 0.03 yuan. Actually, in that reporting period, RMB appreciated. That's why our investment in associates and JV increased because we made investment in RMB and in Hong Kong dollars, it's increased by HKD 400 million. All in total, that increase of HKD 2.053 billion increment.
Because the project teams from our associates, in order to get more guarantee for the gas supply, they need to build more high and medium pressure pipelines to enhance the connectivity and reduce reliance on third-party services. Because the gas supply is our continuous source for revenue, that's why the JV, they make investment on that, resulting in increment. The free cash flow is HKD 2.0 billion. Free cash flow is HKD -959 million. In the future, we will control our CapEx, recover capital, and keep free cash flow positive. In the new financial year, we expect to see a CapEx between a range of HKD 9 billion-HKD 10 billion. Of course, in that CapEx, we have included the expenditure for safety measures.
According to the current net cash from operations, we expect to keep free cash flow positive in this ongoing financial year. Also, here we have provided you 27.4% of the foreign debt. Now, we also have standby credit of HKD 124.6 million, CNY 13.8 billion for the RMB bonds, and CNY 110.8 billion for bank credit. Let's now look at the outlook for this ongoing FY year 2022-2023. In different items, first, dollar margin. It will be standing at CNY 0.5 per cubic meter. That is our goal for dollar margin. With the increase of total sales volume, not including the trade and direct supply, the city and township gas sales will increase 10%-13%.
New residential connections expect to be between 2.6 million-2.9 million. LPG sales will increase 15%. VAS gross and operating profit margin will increase by 15%, and smart living profit before tax will increase by 100%, and that is the company for spin-off and IPO. That part, almost 100% increase. For urban heating connection area, it will increase by 70%. That's our outlook for FY 2022-2023. Okay, now let's move on to carbon peak and neutrality, new energy business. Here, we have constantly striving to new challenges, and we will of course move ahead of the market to become the leading integrated green low-carbon energy provider. In last fiscal year, we have taken measures including funding the Low Carbon Gas Alliance with Shanghai Environment and Energy Exchange.
With the carbon management center, we would provide the accreditation and verification for carbon footprint. We also have had a zero carbon environment. Energy Research Center, we worked with some SPIC, China Three Gorges Corporation, as well as Longi and Baidu. We engage in strategic collaboration. We are looking for the country level photovoltaic and microgrid projects so that we can have diverse and cross-industrial synergy, and this will also pave the way for a possible business model for our other businesses. Also, this will develop renewable energy CCER and forest carbon sinks. Also, we are promoting the carbon service centers in Yangtze River Delta and the Greater Bay Area. We're now working with Luohu District and Xujiahui in Shanghai and Conghua in Guangzhou to sign the agreement for these carbon service centers.
We hope that by these diverse businesses, we will be able to grow the zero carbon industry parks, as well as major demonstration regions for low carbon development. This includes the smart city renewal, green buildings, zero carbon parks. We are looking at some energy-intensive businesses and public service companies. We will help them to reduce their energy consumption by 20%-30%, and getting a 15% return on their green investment. Of course, distributed PV, comprehensive energy solution, and the incremental power distribution grids, the charging piles and charging stations. These will all be our diverse business development highlights in the future. Of course, we will constantly keep you updated if there are any news.
Now, on high quality and sustainable development. One of your top concerns is safety management. In the past year, we learned our lessons on safety control. We have adopted multiple measures to enhance safety management. We've established the safety supervision centers, established a pipeline mapping and testing companies to improve our operation, monitoring and testing. They provide differentiated warnings and guidances for project companies and other departments across the group. We have updated our policies and enhanced staff competencies. We have hired more than 500 professional safety experts to carry out safety monitoring and supervision. Apart from that, we have also purchased advanced testing equipment to enhance our testing efficiency. The five safety supervision centers have an extra 31 PPM-level vehicle-mounted laser methane surveying vehicles and six BeiDou high precision leakage detection vehicles.
Other project companies themselves are equipped with advanced management and testing equipment. That contributed a lot to the improvement of safety control. The other measure is to promote our OMP system. This system will enhance the source power production site and pipeline testing, maintenance and supervision. In the past half year, we have invested substantially in hazard investigation and remediation. These are our main measures to enhance safety control. We aim to achieve an OMP coverage rate of 100% before 2023. If we hit this goal, we will be the first company in the gas industry to achieve a full OMP coverage. In terms of safety expenditure, we made continuous input in operational safety and pipeline renovation. B efore, we have already talked about our plans to renovate our pipelines.
Our investment in pipeline safety increased by 47.7% from HKD 1.49 billion to HKD 2.2 billion. Our safety measures is fully in compliance with government's safety requirements. Our expenditure also reach the government's required ratio of safety expenditure. For the upcoming fiscal year, we aim to achieve 100% of digitalization for high and mid-pressure pipelines. We want to be able to monitor the operations of pipelines in real time. This year, we aim to renovate 2,400 km of pipelines, and a lot of that, about half of that is cast iron pipes.
We have actually completed a large proportion of the renovation projects and aim to finish all of the renovation projects by the end of this year. We have also been looking into hazards in closed environments and households, and we will finish these projects in the next few months. Now, let's also talk about government's policies for safety expenditure. You might have noticed that on March 12th this year, the government report, government work report was released, and it mentioned that the central government plans to invest in infrastructure and advance, and has allocated a budget of RMB 640 billion for such an endeavor, including RMB 370 billion for city gas pipelines.
Apart from that, the central CPC Committee and State Council also issued a document of Promoting Urbanization through Counties , proposing to renovate old pipelines and communities through this organization and pipeline renovation. On June 10th , the State Council also issued the implementation plan for renovating city gas pipelines, urging cities to start renewing pipelines in 2022 and finish renovating all pipelines before the end of 2025. We have also applied for subsidies from government for renovation. We have already completed the first two stages of application and registration. Now we are checking the initiation rate of the pipeline renovation project. The future steps will be to collect subsidies and launch the renovation project. Currently we're working on the initiation checking, as I said.
In this process, we will make sure that we obtain all the valid qualifications for design, construction, and supervising of pipelines. This year we will invest CNY 2.35 billion in safety management, which is a major increase from last year. About CNY 1.5 billion will go to pipeline renovation. If we were able to obtain subsidies from the government, then our CapEx for safety expenditure will decrease substantially. This is a brief description of our safety management work and expenditure and the subsidy application. We have also been developing our information technology to enhance our safety management. We have launched all kinds of digital platforms such as ERP, CRM, and OMP. Through these platforms, we will digitalize our operation to enhance operational and production safety throughout the business processes.
I already talked about this during the interim result announcement, so I won't elaborate on this. Now, let's move on to ESG. In the past year, China Gas continued to improve ESG performances and won multiple awards. First of all, Hong Kong Quality Assurance Agency gave us the Hong Kong Green and Sustainable Finance Awards 2021 . We also secured a loan with Asian Development Bank, and this deal won the Oil & G as Deal of the Year at the Asset Triple A Sustainable Infrastructure Awards. We were also incorporated into the Hang Seng ESG 50 Index and the Hang Seng Corporate Sustainability Benchmark Index series. We also joined the MSCI, DJSI, Sustainalytics, and CDP questionnaires.
In terms of pollutant reduction, we reduced GHG intensity by 9.1%, energy intensity by 33.3%, and water use intensity by 1.8%. We will continue to enhance our ESG performance. This past year, our coverage rate of safety training for contractors was 100%, and we have already linked directors' and management's remunerations to their sustainability performances. We have already provided 1.83 million hours of training for contractors for safety improvement. The slide also listed a lot of other indicators of the performances. As you can see, in terms of completion rate of the product quality and promise signed with buyers and suppliers, we reached 100%. We also worked hard to prevent corruption and violations stringently.
We have also developed and updated the board policies and improved the sustainability management processes to enhance corporate governance. This year, we actually have held the board meeting to talk about giving a bigger role to independent directors to enhance ESG performance. In terms of carbon neutrality roadmap, China Gas has already completed its carbon neutrality roadmap. We have made three commitments and we'll carry out seven carbon reduction actions. By 2030, we will reduce GHG emission intensity by 50%, with 2021 as the baseline year. That's one of our main promises. By 2050, we will achieve carbon neutrality. We will peak carbon emissions by 2030. Our carbon reduction actions includes developing green energy such as PV, wind power, hydrogen energy, and biomass energy.
We will incorporate them into our operations to facilitate green, high-quality business growth. We will also incorporate IoT technology to monitor our operational scenarios in real time. We will enhance our energy use efficiency in this process. We will also develop net zero path, adopt methane emission control measures, carrying out CCUS demonstration projects, developed carbon sinks and low carbon logistics, enhance supply chain efficiency, reduce vehicle emissions during the transportation, replace energy-intensive facilities and equipment, and cut emissions at the source. We'll also carry out smart operation by building intelligent operation management platforms. We will also promote green and low carbon transportation. Explore substituting hydrocarbon for natural gas to give our users cleaner options. Our carbon neutrality maps will elaborate on our three commitments and seven carbon reduction actions.
If you're interested, you may check our carbon neutrality roadmap report after the meeting upon its publication. These are a brief description of our business performances. Let's move on to Q&A.