Hong Kong to save $105m with new cross-border water deal

PUBLISHED : Friday, 14 April, 2006, 12:00am
UPDATED : Friday, 14 April, 2006, 12:00am

Hong Kong will save about $105 million in the next three years and stop dumping huge amounts of unwanted water under a revised supply agreement signed with Guangdong yesterday.

The deal gives the city access to a virtually unlimited water supply for an annual lump sum payment of $2.49 billion.

But unlike the existing arrangement, under which Hong Kong pays per cubic metre for a fixed amount of water, it will only take as much as it needs.

The deal continues to give Hong Kong priority over other Pearl River Delta cities, guaranteeing an uninterrupted supply even in an extreme drought.

It gives Hong Kong the right to draw up to 1.1 billion cubic metres of water a year from the Dongjiang, or East River - an amount that, according to forecasts, is unlikely to be reached before 2044.

Under the present deal, the amount of water supplied is fixed at 810 million cubic metres a year, for which the city pays $3.085 a cubic metre. Millions of dollars worth is dumped in the sea each year because consumption has risen more slowly than expected.

Compared to the $2.53 billion payment in 2004, the change will result in a potential saving of $34.9 million a year, or a total of $105 million up to 2008. But the savings will not be passed on to consumers, who are already being charged only half the full cost of water.

On quality, Guangdong has pledged that the water will meet the latest national standard adopted in 2002, surpassing the old one of 1988.

The agreement follows drawn-out talks that have been going on since the previous agreement officially expired in 2004.

In the meantime, payment for last year was capped at the 2004 level.

The deal, signed in Guangzhou between Secretary for the Environment, Transport and Works Sarah Liao Sau-tung and Zhou Rifang, director-general of Guangdong's Department of Water Resources, will have to be renegotiated in 2008.

Under the agreement, Hong Kong will provide a monthly demand forecast after taking into account local rainfall and storage levels.

'This will enable us to have better control of the storage level in Hong Kong, thus minimising the overflow more effectively and saving pumping costs,' a water official said.