The move - according to an unidentified official within the Administration Bureau - will come about as a result of the Shanghai's decision to pull out of administrating the local gas industry and its desire to reform the industry as a whole. It is claimed that the merger is almost a done deal.

It is rumoured that part of the reforms being planned would allow for both private and foreign investors and that the city's largest energy company, Shenergy Co Ltd, will have a 60% majority stake in the new entity.

When asked for comment, only an unidentified executive with Shanghai Pudong would only say, "We are currently running our business as usual and waiting for the city government's final decision to announce the reform plan."

Shanghai Pudong and North Shanghai are both government owned. The third, Shanghai Dazhong, is a 50% owned government entity (with the balance being held by the Shanghai Dazhong Public Utilities (Group) Co Ltd). All three provide 3.37 million users with their daily gas requirements.