Following is a question by Dr the Hon Ho Chung-tai and an oral reply by the Secretary for Economic Development and Labour, Mr Stephen Ip (in the absence of the Secretary for the Environment, Transport and Works) at the Legislative Council meeting today (June 16):
Question:
The Financial Secretary pointed out in this year's Budget Speech that the Government had just completed the preliminary feasibility study on the reprovisioning of the Sha Tin Water Treatment Works (STWTW) through Public Private Partnership (PPP), and the results were encouraging. However, in Australia and the United States, there have been unsuccessful cases of private sector participation in the provision of utility services, or cases in which the services provided have seriously affected the local people's livelihood. In this connection, will the Government inform this Council:
(a) whether staff of the Water Supplies Department were involved in the study; if so, of the details of their involvement; if not, the reasons for that;
(b) of the basis for drawing the conclusion that the study results are encouraging; and
(c) whether it has assessed the implications of the plan for the reprovisioning of STWTW through PPP on public health, as well as the economy and employment situation of Hong Kong; if it has, of the assessment results?
Reply:
Madam President,
I am replying to this oral question on behalf of the Secretary for the Environment, Transport and Works. The Government commissioned in November 2003 a consultancy study on the feasibility of adopting the Public Private Partnership (PPP) approach in the reprovisioning and operation of the Sha Tin Water Treatment Works (STWTW) and the delivery of related water supply, distribution and customer services. The study was completed in May this year and the two study reports have been uploaded onto the homepage of the Environment, Transport and Works Bureau (ETWB) for public information.
(a) When conducting the study, the consultants maintained close liaison with the ETWB and the Water Supplies Department (WSD) and communicated with the staff of the WSD. As arranged by the WSD, the consultants met the WSD staff representatives on 6 January 2004 to discuss directly with them their views and concerns.
(b) The adoption of the PPP approach in the delivery of water treatment, supply and other related services is quite common. There are many successful cases in different places, for example, the Indianapolis Water Services Partnership in USA, the AQUA project in Australia, the Agglomeration Communaute Urbaine de Lyon in France, the Lingzhuang Water Treatment Plant in Tianjin and the Macao Water Supply in Macau. The consultants have conducted a research on a number of PPP projects similar to the reprovisioning of the STWTW in the Mainland and overseas. Their conclusion is that it is feasible to adopt the PPP approach in the reprovisioning and operation of the STWTW and the Government is likely to attain better value for money and cost savings through this approach as compared with the conventional mode of project delivery. Furthermore, it is likely to be beneficial to adopt a PPP approach for the water supply, distribution, and customer services as well. According to the market enquiry exercise conducted by the consultants from December 2003 to January 2004, there are many service providers in the market who have the capability and experience in the construction and operation of reprovisioning water treatment plants and are interested in the reprovisioning of the STWTW and the delivery of related services. Therefore, we consider the results of the study encouraging and will further examine the feasibility of adopting the PPP approach in the reprovisioning and operation of the STWTW.
(c) Government always attaches great importance in maintaining a high quality of potable water and a reliable water supply. Our commitment and achievements are for all to see. If the Government decides to adopt the PPP approach in the provision of water supply facilities and services, a rigorous water quality monitoring mechanism will be set up to ensure that the water supply services provided by the private operator will comply with the guidelines for drinking water issued by the World Health Organisation and the standards and specifications laid down by the Director of Water Supplies. Such a mechanism will safeguard public health and ensure that the reliability of water supply and water quality will be maintained at a high level. In addition, adopting the PPP approach can facilitate the introduction of modern water treatment technologies and enhance the overall efficiency of our water supply system, which will help us achieve the objective of improving the quality and cost-effectiveness of our water supply services. As the project may be expedited if the PPP approach is adopted, it will help tackle the problem of under-employment in the local construction industry.
The Government is committed to improving efficiency of services to the public which rightfully expects value-for-money of services provided. PPP is a well tried out formula around the world and there is no reason why Hong Kong should not explore PPP.
Ends/Wednesday, June 16, 2004
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