Extension of the Information and Consultation Agreement with the Hong Kong and China Gas Co Ltd
For Information
On 31 March 2003
Legislative Council Panel on Economic Services
INFORMATION AND CONSULTATION AGREEMENT with
THE HONG KONG AND CHINA GAS COMPANY LIMITED
Introduction
This paper informs Members of improvements to the Information and Consultation Agreement (ICA) between the Government and The Hong Kong and China Gas Company Limited (HKCG).
Background
2. The Government and HKCG first entered into an Information and Consultation Agreement relating to the Company's core gas business and gas-related activities in Hong Kong in April 1997. The ICA was concluded on a voluntary basis and on terms and conditions mutually acceptable to both parties. When it expired in April 2000, it was extended for three years by a Supplemental Agreement from 3 April 2000 to 2 April 2003.
The Objective of the ICA
3. The objective of the ICA is to increase transparency in the HKCG’s tariff setting mechanism, and justification thereof, in the event of tariff adjustments. The ICA also stipulates certain procedures for the Company to :
(i) consult the Government in the event of tariff adjustments and major system additions (e.g. addition to infrastructure); and
(ii) disclose certain corporate information to the public on an annual basis.
4. Pursuant to the ICA, the Company consulted the Government and briefed the Energy Advisory Committee (EnAC) and Legislative Council Panel on Economic Services in late 1997 on the adjustment to their tariff and fixed monthly service charge for the year 1998. This was the only occasion when the ICA was ‘invoked’ : HKCG has not made any adjustment to its tariff and fixed monthly service charge since then.
5. HKCG has not had any major system additions since the signing of the ICA.
6. Pursuant to the ICA, HKCG publishes each year, a booklet (Towngas Corporate Information) for the public to provide information relating to the financial, operational and environmental matters in the preceding year. The Company has been receptive to suggestions on the content of this booklet.
Recent Development
7. The current ICA will expire on 2 April 2003. Following discussions, we have agreed with the HKCG that –
(i) the ICA should be extended to meet its objective (paragraph 3 above); and
(ii) improvements should be made to the ICA, to demonstrate the Government’s priority and HKCG’s commitment to provide transparency on tariff setting and enhance public safety.
Improvements to the ICA
8. To enhance public safety and transparency in tariff setting, HKCG will provide the Government annually with their planned capital expenditure and those on network repairs and maintenance, in the coming financial year, and the actual expenditure on each of the foregoing items in the preceding year.
9. By way of providing information to the public to enhance transparency, HKCG will disclose more information in the booklet (Towngas Corporate Information) published annually to :
(a) expound on the Company's commitment to operational efficiency and environmental awareness, their action taken and the results thereof; and
(b) include, and separately account for measures taken and the results thereof, to enhance safety of the gas supply system and that of the public.
10. To tie in with the HKCG production of its annual report, the Towngas Corporate Information booklet will be published in June, instead of April as from 2003.
Next steps
11. We have informed the Energy Advisory Committee on 27 March 2003 of the new additions to the agreement. The improvements, as set out in Annexes 1 & 2, will be incorporated into a supplemental agreement to be signed between the Government and the HKCG. The supplemental agreement is proposed to take effect from 3 April 2003 for a period of three years. A copy of this supplemental agreement will be sent to the Legislative Council after the signing. It will also be uploaded to the Economic Development and Labour Bureau’s website.
Members’ Advice
12. Members are requested to note the improvements and the proposed extension to the ICA.
Economic Development and Labour Bureau
March 2003
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