HK water rates could double

HONG KONG - Water rates may have to double in Hong Kong to meet the rising cost of bringing fresh water from the mainland.

This is occurring as Guangdong province also faces increasing demand from its other cities.

Secretary for Development Paul Chan Mo-po is in Guangdong today (Wednesday) to discuss water resource planning. This is a day after the Working Group on Long Term Fiscal Planning said Hong Kong water rates were due for a review after more than 20 years.

The group noted that unsustainable public spending comprised the most costs in acquiring the water needed to provide for some 80 per cent of local needs from the mainland.

Water Supplies Department revenue has been unable to cover operating costs since 1998, with water charges bringing a little over HK$2 billion in 2013. This compares to the more than HK$8 billion (S$1.4 billion) price tag to import, treat and pipe fresh water to the city's residents and businesses.

Making the water utility pay for itself would require drastic steps, or a near doubling of current water rates according to Chinese University of Hong Kong geography resource management Professor David Chen Yongqin.

Chen pegged the cubic meter price of water at HK$8, compared to the roughly HK$4 per cubic meter households are charged after the first 12 cubic meters used - free of charge.

"There is a pretty high price for all these efforts, in transport, purification and distribution, but the price end users pay is rather low," Chen said.

Hong Kong water rates are among the lowest compared with other global cities. This equates to roughly a third of what Singaporeans pay, or less than a fifth of what Londoners or New Yorkers are charged.

Local water usage per head also outstrips international peers with Singapore recording a daily average consumption of roughly 150 liters per person compared to Hong Kong's 230 liters per day.

"People consider this a basic need and the government has invested a lot into this over the years. But there has not been any increase in water prices despite inflation and the increased cost of providing a service," Chen said.

But he warned that any potential cost increases were likely to bring pressure and would face opposition from the business sector.

"It will be more difficult to get restaurants and hotels to swallow increases because they are facing pressure over minimum wages and high rents. Business is essential for maintaining employment and they are already under huge pressure from the costs of running a business," Chen said.

Change is needed as the supply of most of Hong Kong's potable water, the Dongjiang River, is coming under increasing strain as more than 40 million people in Guangdong rely on the river.

Some 40 million people rely on the Dongjiang's catchment area. While the central government has given preferential treatment to Hong Kong, affording it a higher priority when allocating water resources, the city needs to improve efficiency.

While local reservoirs cover 30 per cent of the city's landmass, annual local rainfall was unreliable, with 2011 only seeing 1,500 mm of rain, compared to the average of 2,300 mm seen over the past two years.

Grey water use and water recycling, vigorously adopted by Singapore, is virtually nonexistent in Hong Kong, Friends of the Earth (HK) CEO Mayling Chan said, although the city leads in sea water toilet flushing.