Star Ferry fleet faces an uncertain future

PUBLISHED : Saturday, 28 July, 2007, 12:00am
UPDATED : Saturday, 28 July, 2007, 12:00am

Bid to clean up vessels' emissions hits snag

Star Ferry's iconic but ageing vessels face a question mark over their future as efforts to clean up emissions run into a stumbling block and their book value shrinks towards zero.

The city's oldest public transport operator, already struggling with falling revenue and changing transport patterns, is up for a franchise renewal next year which might lead to stricter emission controls for the smoke-belching fleet.

It has been testing cleaner fuels and new devices for the past few months, but initial results have been disappointing, a source familiar with the test results said.

The source said one of the problems is that using ultra-low-sulfur diesel fuel in the old engines does little to improve emissions and generates less power, which can lead to the use of more fuel.

If the problem cannot be solved, the company may have to consider replacing the fleet, a huge hurdle for an organisation that reported a profit of just over HK$6 million in 2005.

The ferries use industrial diesel with a sulfur content of 0.5 per cent - 100 times that of ultra-low-sulfur diesel, the only fuel available for diesel vehicles on the roads.

The operator tested diesel emulsified with water and chemicals, as well, but the emission result was not impressive and there were fears of pipe corrosion from the water content.

Star Ferry, founded in 1881, runs three commuting routes. Its eight passenger vessels are 46 years old, on average. The latest additions were Golden Star and World Star, acquired in 1989.

In its 2005 annual report, the firm said the acquisition cost of the fleet was about HK$46 million, but its net book value - after deducting accumulated depreciation - was only HK$2.9 million.

This meant that each vessel had an average disposal value of about HK$250,000.

The company has warned that the relocation of its Central pier and the pending removal of the bus terminal in Tsim Sha Tsui might further erode its revenue.

It has proposed a fare increase of 23 per cent for its Hung Hom routes, which it says are making an accumulated loss of HK$10 million. Its most popular route, between Central and Tsim Sha Tsui, still makes a profit.

Asked about the emission tests, the company did not give details but said they were part of ongoing efforts to improve its operations.

A spokeswoman for the Environmental Protection Department said they were working on ways to help the ferry operator.

Air pollution from marine sources, including local ferries and ocean-going cargo ships, accounted for 17 per cent of the city's emissions of nitrogen oxide, 7 per cent of particulates and 4.6 per cent of sulfur dioxide in 2005. The government says it will explore the possibility of requiring ferry companies to switch to ultra-low-sulfur diesel when their licences are renewed.

Full steam ahead

The number of harbour trips made per day by Star Ferry is more than 700