Kananga was created in 1950 from the barrios of Lonoy, Kananga, Rizal, Tugbong, Montebello, Aguiting, Tagaytay, Montealegre, Libungao, Naghalin, and Masarayao which all used to be part of Ormoc City.
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The city enjoys economic growth because it supplies a large part of the country's power needs with its abundant geothermal power resources in Tongonan and neighbouring Kananga town.