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Hong Kong closes new water import deal with mainland China

  • Hong Kong closes new water import deal with mainland China

Hong Kong has struck a new water import deal with the government of mainland China. This new pact allows the city to pay for the actual amount of water supplied, which is estimated to save Hong Kong HK$324 million (US$42 million) over nine years, reports Yahoo News.

On Monday, the Secretary for Development Michael Wong Wai-lun signed the agreement with Guangdong province for water from the Dongjiang, or East River, for the following three years, although it expects to maintain this new agreement in place for the following nine years, until 2029.

The authorities of Guangdong consented to freeze the 2021 water prices at 2020 levels due to the economic recession caused by the COVID-19 pandemic. A statement from Hong Kong also said: “The approach enables reliable water supply to be maintained – even under extreme drought conditions with a return period of once in 100 years.”

Nowadays, eighty per cent of the city’s water is imported from the Dongjiang. In 2006, the city had signed a “package deal lump sum” deal for a fixed ceiling of 820 million cubic metres each year. This agreement was often denounced and considered negative for Hong Kong since the city only imported about 700 million cubic metres on average annually over the years.

Thanks to this new deal, the government estimates it will pay HK$4.82 billion (US$622 million) in 2021, similar to this year. With price increases over the next three years, it would pay up to HK$5.01 billion (US$646 million) in 2023 for the maximum amount of water, 820 million cubic metres.

Dr David von Eiff, an associate researcher at local think tank Civic Exchange who studies water supply management, believes that this new agreement is not a positive move for Hong Kong, since he says that it will cost more to use less water.

“It’s not that great a deal for us in all honesty, in a lot of ways it is not that different from the lump sum deal.”

David von Eiff also added that based on a government estimate, if Hong Kong imported 615 million cubic metres of water in 2021, it would pay HK$4.82 billion, or about HK$7.84 per unit, not considering the price freeze. But the unit price decreased to HK$5.95 if the city imported the full supply of 820 million cubic metres.

Von Eiff thinks that Hong Kong could have tried to sign a water rights contract, where the city owned the water it purchased and could sell the excess to third parties.

Nonetheless, Yahoo News also spoke with lawmaker Tony Tse Wai-chuen who said that the new deal was an improvement, “but could always be better”.

In his opinion, the government should do more to encourage families to save water by waiving bills for those who used less than a certain amount each month. He also said that the government is also looking at decreasing the water utility bill for residents in the upcoming budget, due to the impact of the coronavirus pandemic.

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