The tariff CLP will charge GPC is the CLP large power tariff with a discount of approximately seven percent of the basic tariff. CLP justify the discount on the grounds that they would make the same tariff available to any consumer in Hong Kong with a demand at the same level and with the same timing. Under the present arrangement GPC resells the electricity to consumers at GPC tariffs. Tariffs for supplies outside the special economic zones are fixed by the central Government and are considerably lower than Hong Kong tariffs. Tariffs for supplies to the special economic zones are fixed separately and are at present marginally higher than those charged in Hong Kong.

Supply to Shekou Industrial Zone

8

CLP have recently received a request from the China Merchants Steam Navigation Company Limited (CMSN) to supply electricity to the Shekou Industrial Zone (SIZ) in the Shenzhen Special Economic Zone (SSEZ) starting, if possible, in April 1982. The CMSN has been authorised by the State Council of the Peoples Republic of China to develop and operate the SIZ.

9

The supply CLP could offer to SIZ could satisfy a maximum demand level of 60 MW by late 1983 or early 1984 and assuming the supply begins in April 1982 it is expected that about 240 million units of electricity would be supplied by 1984.

10

The supply to the SIZ would be additional to the supply to GPC under the present and new agreements. It would have a number of distinctive features. First, it is probable that the supply would be direct to individual consumers in the SIZ and not to GPC. Second, as CMSN have asked that these consumers should get a supply of electricity as reliable as that available to consumers in Hong Kong, the supply would not be interruptable. Third, the pattern of demand from the SIZ would not complement that of Hong Kong to the same extent as the supply to GPC already agreed, although because of the large size of the generating sets CLP are now having to install CLP could meet this relatively small demand without installing additional capacity in Hong Kong. Because the nature of the supply to the SIZ would be different from that to GPC, there would be no. grounds for allowing a discount on sales and consumers in the SIZ would have to pay a tariff not less than that paid by like consumers in Hong Kong. In practice they may have to pay a tariff higher than that charged to Hong Kong consumers if CLP has to provide any extra transmission or other facilities.

11

CLP has responded favourably to this request and is negotiating possible terms of supply within these parameters.

G.S. 166

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