An official promised to press for a more flexible water deal from Guangdong following criticism that $1.7 billion had been wasted because of excess supply over the past five years.
Testifying at a hearing of Legco's Public Accounts Committee, Secretary for Works Lee Shing-see said he would raise the issue at a meeting with Guangdong officials tomorrow.
'We will fight for a flexible mechanism. However, since we have signed a contract, any changes have to be agreed by both sides,' he said.
Mr Lee said officials would explore ways to meet growing demand, such as building reservoirs.
In its latest value-for-money report, the Audit Commission criticised the Government for failing to arrange a mechanism to cut supply if there was heavy rainfall.
Annual supply was set for the period from 1995 to 2000 under an agreement that will expire in 2008.
The amount was based on an estimated 3.43 per cent annual increase in consumption.
Actual growth in the past 10 years was 1.28 per cent due to relocation of factories to the mainland.
The Audit Commission estimated a financial loss of $1.72 billion in the past five years due to the overflow of reservoirs after heavy rain.
A further $1.84 billion could be wasted in the next five years if the supply mechanism is not revised.
The Government had asked for a cut in supply in 1995, six years after the agreement was signed. This was rejected.
Guangdong agreed last year to reduce the annual supply from 30 million cubic metres to 10 million cubic metres until 2004.
Legislators were unsatisfied with yesterday's comments by officials.
'Do you agree the Government has made a wrong decision [in failing to secure a mechanism to cut supply?]' asked Emily Lau Wai-hing of The Frontier.
Mr Lee denied there had been negligence.
'Before 1989, there was rationing of water. We have to ensure a reliable supply of water,' he said.
He said the agreement had been endorsed by the Executive Council and legislature.
Director of Water Supplies Hugh Phillipson said it was a sensible and pragmatic agreement as the water supply from rainfall was not reliable.
Before a crucial meeting with Guangdong had been held in June 1994, rainfall had been less than average.
However, heavy rain in June after the meeting reversed the situation, he said.