Taxpayer to fund $2b loan for water
Taxpayers would fund a $2.3 billion interest-free loan to Guangdong under a deal to give the SAR cleaner water.
The proposal would reduce the amount of water bought by the Government from across the border, but would be unlikely to mean cheaper bills for consumers.
Guangdong would put the money towards a pipe from the Dongjiang, or East River, which provides 70 per cent of the SAR's water. It would pay the rest of the $4.1 billion cost itself. Water now moves through an open channel, which has become polluted.
In 1989, Hong Kong agreed to buy 780 million cubic metres of water this year, with that amount increasing every year until it reached 960 million cubic metres in 2004. But demand has been dropping as factories have shifted to the mainland.
In return for the loan, Guangdong has agreed to reduce supply by 560 million cubic metres over the next seven years - saving Hong Kong $2.2 billion.
However, Director of Water Supplies Hu Man-shiu said yesterday that this would be offset by the $2 billion interest foregone on the loan.
He said some savings might be made in treatment costs as the water would be cleaner, but other factors such as inflation would mean consumers' bills would stay the same or would rise.
If the deal wins provisional legislature approval, work on the pipeline would begin at the end of this year and finish by the end of 2002. The first of 20 equal, annual repayments on the loan would be made in 2003.