Hong Kong strikes new water import deal with mainland China, paying only for amount supplied

Zoe Low
·3-min read

Hong Kong has reached a new water import deal with mainland Chinese authorities, with the city now able to pay only for the actual amount supplied, saving an estimated HK$324 million (US$42 million) over nine years.

The new “package deal deductible sum” agreement with Guangdong province for water from the Dongjiang, or East River, for 2021-23 was signed by Secretary for Development Michael Wong Wai-lun on Monday. Water prices are set to increase 1.33 per cent annually to account for the exchange rate between the Hong Kong dollar and renminbi.

The city expects to maintain the new import deal for up to nine years, until 2029.

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“The approach enables reliable water supply to be maintained – even under extreme drought conditions with a return period of once in 100 years,” a government statement said, adding that the Guangdong authorities had agreed 2021 prices would be frozen at 2020 levels because of the economic difficulties caused by the coronavirus pandemic.

Hong Kong will have a reliable water supply even under extreme drought conditions, the government says. Photo: Photothek via Getty Images
Hong Kong will have a reliable water supply even under extreme drought conditions, the government says. Photo: Photothek via Getty Images

The government estimated it would pay no more than HK$4.82 billion (US$622 million) in 2021, the same as 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.

Up to 80 per cent of Hong Kong’s water is imported from the Dongjiang and a previous “package deal lump sum” agreement struck in 2006 saw the city paying for the fixed ceiling of 820 million cubic metres each year. The deal was often criticised as unfavourable as Hong Kong usually only imported about 700 million cubic metres on average annually over the years.

However, the new approach was still not good enough, according to observers, with a researcher saying the total savings were negligible and in effect it would cost more to use less water.

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“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,” said Dr David von Eiff, an associate researcher at local think tank Civic Exchange who studies water supply management.

Based on a government estimate, if the city imported 615 million cubic metres of water next year, 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 said.

Up to 80 per cent of Hong Kong’s water is supplied by the mainland. Photo: Edward Wong
Up to 80 per cent of Hong Kong’s water is supplied by the mainland. Photo: Edward Wong

“So you’re better off just filling up the reservoir anyway,” he said, adding that a better method for Hong Kong could be a water rights model, where the city owned the water it bought, and could sell the excess to other people.

Lawmaker Tony Tse Wai-chuen said the new agreement was “better than what we had before, but could always be better”.

While the deal afforded Hong Kong more flexibility, Tse said, he hoped the government could provide more incentive to families to save water by waiving bills for those who used less than a certain amount each month. He added the government would also look at decreasing the utility bill for residents in the upcoming budget, as the economy had been hit hard by the Covid-19 pandemic.

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