the return on average net fixed assets (ANFA) in t he Waterworks Operat ing Account s if interest charges were levied in the se accounts (paragraph 11); and
(b)
the cost of water bought from (paragraphs 15 and 16).
China
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With regard to (a), if interest charges of 8.5% per annum were charged to the Waterworks Operating Accounts, it is estimated that, during the nine years between the commencement of the advance in 1989/90 and its final repayment in 1998/99, water consumers would have to absorb a total interest charge of $533 million on advance of $1,053 million. While the advance would not affect the level of ANFA, the annual interest charge would reduce marginally the return on ANFA until the advance is fully repaid (the target return is 7% per annum). On the available projected ANFA figures, the implications of the interest charge would be as follows
(i)
Interest at 8.5%
on ANFA
1989/90 1990/91 1991/92 1992/93
$20.14M $42.96M $64.43M $84.57M
per annum
(a)
(ii)
Average Net
$9,441M $10,431M $11,440M $12,523M
Fixed Assets
(b)
(iii)
Net effect on
-0.21%
-0.41%
-0.56%
-0.68%
return on ANFA
(a)
(iv)
Revised Projected
5.89%
5.79%
5.94%
6.52%
return on ANFA
(v)
Previously
6.1%
6.2%
6.5%
7.2%
projected
return on ANFA