Water from Dongjiang gets pricier

The government will have to pay HK$5.14 billion for importing Dongjiang water next year, with the cost rising to a "reasonable" HK$5.38 billion in 2026, according to the Development Bureau.

In a paper submitted to the Legislative Council panel on the development yesterday, the bureau said a new three-year agreement will be signed before December 31, with the limit to remain at 820 million cubic meters per year.

However, the annual ceiling of prices will increase to HK$5.14 billion next year, HK$5.26 billion in 2025 and HK$5.38 billion in 2026, compared to HK$4.89 billion, HK$4.95 billion, and HK$5.02 billion from 2021 to this year.

The bureau also secured with the Guangdong government an annual percentage increase in ceiling prices of 2.39 percent for the coming three years.

The increase in the annual price is "reasonable" after considering multiple factors, including changes in the exchange rate between the yuan and Hong Kong dollar, changes in the relevant price indexes of Hong Kong and the mainland, and increases in operation cost.

"The rate of 2.39 percent not only excludes the increase in the operation cost, which is even lower than 2.4 percent - the actual combined annual change rate in consumer price indexes of both sides and the exchange rate between the yuan and HK dollar in the past three years," the bureau said.

The annual increase rate from 2021 to 2023 under the current agreement is 1.33 percent, with the rate for the 2018 to 2020 period being 0.3 percent. From 2015 to 2017, the annual increase rate was above 6 percent each year and reached as high as 6.65 percent in 2015.

A water price deduction mechanism called "package deal deductible sum" will also remain in place in the new agreement, which allows a reduced price according to the actual amount of water supplied.

Under the arrangement, the discount rates for each cubic meter of untaken Dongjiang water from 2024 to 2026 will increase to HK$0.315, HK$0.323, and HK$0.331, which will be deducted from the annual limit prices.

The mechanism will be maintained at least up to 2029 after its first adoption in 2020.

The bureau added that the water from Dongjiang filled the gap arising from inadequate local sources, mainly rainfall. It is unstable to rely on rainfall collection due to fluctuations in rainfall every year, it said.

It added that the Dongjiang supply, which accounts for more than 70 percent of the city's freshwater supply, "is essential for Hong Kong."

Dongjiang water has been "supporting Hong Kong's social and economic development, contributing to its achievement as an international financial center," the bureau said. "This also makes Hong Kong a better place for people to live in.'

ayra.wang@singtaonewscorp.com