Hong Kong’s fresh water supply agreement with Guangdong is due for renewal in 2017.
It’s time for our government to renegotiate for a better deal with the our mainland neighbor and repeal all the unfair terms in the agreement.
In particular, the SAR government should seek to scrap the “package deal lump sum” provision for calculating water prices, under which our city has to pay a fixed price regardless of the actual amount of water we are importing.
It is estimated that because of this provision, our city has paid an extra HK$4.5 billion in total for water from the Dongjiang River over the past 10 years, despite the fact that we have been importing only an average 85 percent of the amount of fresh water specified in the agreement annually since 2006.
In other words, we still have to pay the full price even though we are only importing 85 percent of the amount of water we are supposed to get. This constitutes an enormous waste of public resources.
The Guangdong deal is a complete rip-off. We are currently paying five to six times more than what the neighboring cities of Shenzhen and Dongguan are spending for their water supply largely because the amount they pay is based on the actual amount of water they are purchasing.
The SAR government has made numerous attempts to renegotiate the terms of the deal with the Guangdong Department of Water Resources, but our request has been repeatedly rejected.
Guangdong has every reason to retain the “package deal lump sum” provision.
Providing water for Hong Kong has proven a highly lucrative business, and currently accounts for over 70 percent of the profits of Guangdong Investment Limited, the state-owned enterprise that runs the water supply scheme.
The urgent task before the SAR government is to renegotiate a deal with Guangdong that is fairer to us than the existing one.
That includes the abolition of the “package deal lump sum” provision and the introduction of a scientific, transparent mechanism for water rate adjustments.
This article appeared in the Hong Kong Economic Journal on Nov. 17.
Translation by Alan Lee
[Chinese version 中文版]
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