Free-market concerns over mainland power imports

Option could be a step back for city's liberalised economy, argues Chamber of Commerce

PUBLISHED : Wednesday, 25 June, 2014, 4:49am
UPDATED : Wednesday, 25 June, 2014, 5:14am

A government proposal to import a third of power from the mainland grid could prove a step backwards for Hong Kong's free-market economy, the city's business sector has warned.

In its final submission in response to the Environment Bureau's options for the city's power supply, the Hong Kong General Chamber of Commerce questioned the suggestion by officials that mainland electricity imports would help open up the market - currently controlled by just two Hong Kong companies, CLP Power and HK Electric.

The chamber said importing power could be perceived as a "significant step back" from the city's "market-based liberalised economy" as the mainland's market was dominated by state-owned enterprises.

And the chamber's seven-page submission challenged whether setting a fixed level for electricity imports was itself an "intervention in the free-market economy".

It added that market liberalisation was a long-term policy that required detailed study and comprehensive economic assessments.

The bureau is considering two options for meeting the city's energy demand by 2023. One is to import 30 per cent of electricity from China Southern Power Grid; the other is to boost local gas-fired generation capacity to 60 per cent.

About 86,000 submissions had been made to the bureau by the time its public consultation ended last week. The chamber's submission was made public yesterday.

"We don't think the government should put the cart before the horse by considering opening up the market as one of the key objectives in deciding the fuel mix," the chamber's chief executive Shirley Yuen told the South China Morning Post.

Yuen said the chamber - which has some 4,000 members and is the largest representative of business in the city - was "a little disappointed" by the consultation document and felt it lacked the information necessary to make an informed decision.

"In the absence of [this information], the chamber definitely believes local generation is the more viable option for the near and medium term."

Yuen questioned the reliability and safety of the import option, while the chamber also questioned the bureau's projections for power demand and the environmental impact of importing power.

Asked if the business sector was worried about global fluctuations in gas prices if the local-generation option were chosen, Yuen said Hong Kong as an open economy would never be immune to such a problem.

"But if you are worried about it and then you turn to a sole supplier [via grid power purchase], it is equally worrying that once we were to rely on a single supplier, we would have no leverage on price negotiation."