6.5. New business opportunities with mainland China
Privatization of the water utility would encourage business co-operation between Hong Kong and mainland China. One business opportunity lies in cooperating with authorities in mainland China to construct reservoirs on the mainland. Land area in Hong Kong is limited, and it is not easy to find suitable sites for the construction of new reservoirs. Although the Chinese authorities have assured our water supply until 2000, there have been various reports that urbanization and industrialization along the East River have caused water pollution problems and such developments have reduced the available water supply. Apart from changing the water charging system to encourage conservation, we have to seek alternatives to increase our water supply beyond the year 2000. Building new reservoirs in China can bring benefits
to both Hong Kong and mainland China. While mainland China can provide the land and labour needed in the construction of reservoirs, Hong Kong can provide the engineering support and management skills. This would utilize the resources of both partners in an effective manner. Hong Kong’s reliance on water supply from the East River has resulted in the territory being subjected to monopoly pricing. In the future, the privatized water utility should be encouraged to seek new sources of water supply from mainland China. Other local authorities on the mainland have shown interest in supplying water to Hong Kong. The Government can modify the cost passthrough factor in the price-cap formula to induce the
privatized water utility to seek cheaper sources of water supply. Hence, a privatized water industry will facilitate
a competitive market for water supply to develop in mainland China. After Hong Kong has diversified its sources of water
supply from mainland China, some of the small local reservoirs may no longer be useful for providing water. These reservoirs, together with the associated catchment areas, can be redeveloped for other purposes. In Hong Kong, the Wong Nai Chung Reservoir Park was converted from a disused reservoir under the same name. Because of its small capacity, the reservoir was converted and was handed to the Urban Services Department for recreational purposes in 1978. The Government may consider allowing the privatized water utility to cooperate with other private business enterprises to redevelop the existing reservoirs and catchment areas.