Hongkong Electric

Struggle to seal power deal before deadline

PUBLISHED : Friday, 28 December, 2007, 12:00am
UPDATED : Friday, 28 December, 2007, 12:00am

A deal on regulations governing power companies is close, but might not be clinched by the end of the year, the head of one of the two suppliers said yesterday.

'We are close to concluding a deal but an agreement might not be likely' by the end of this year, Hongkong Electric group managing director Tso Kai-sum said. 'Perhaps it might come early next year.'

His remarks, after a shareholders' meeting, were made four days before the government's deadline for a conclusion of talks on the Scheme of Control Agreement.

The talks have been going on for more than two years.

The scheme for Hongkong Electric is due to expire at the end of next December and that for CLP Power in September.

CLP Power said yesterday that it was also still negotiating with the government and was confident that a deal could be struck.

Describing the negotiations as 'enormously difficult', Mr Tso said differences were being narrowed and a deal was close. But he refused to disclose further details.

'While some might demand more and others want less, it is difficult to get all people satisfied with the agreement,' he said.

A source close to the negotiations yesterday said both sides had to work during the Christmas holidays to strive for an early deal.

But he said the deadline should not be seen as so rigid that a few days of slippage should not be allowed.

The source said power companies remained optimistic and shared the same goal of concluding a deal as soon as possible.

'There are a lot of clauses in the deal and it will take a bit more time to handle them,' he said, adding that differing views had converged.

Secretary for the Environment Edward Yau Tang-wah had publicly stated that a deal with both companies had to be concluded before or at the end of the year, or the government would table a bill that would result in regulation of the power producers by law.

But Mr Tso said such a bill was unnecessary.

Mr Yau earlier said the government would hold the line on its stipulation in the deal of a permitted rate of return of below 10 per cent, a link between emissions performance and the rate of return, and liberalisation of the power market in the long term.

A spokesman for the Environment Bureau said it had no comment on the progress of the talks and whether a bill would be tabled as scheduled if talks failed to bear fruit by Monday.