WEDNESDAY, NOVEMBER 24, 1982
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+I MUST EMPHASISE AT THIS POINT THAT THESE PLANS AND THE SCHEMES OF CONTROL HAVE BEEN APPROVED BY THE EXECUTIVE COUNCIL AND THIS REINFORCES MY VIEW THAT A COMMISSION OF ENQUIRY WOULD BE TOTALLY INAPPROPRIATE.+
ON THE THIRD PROPOSAL, MR JACOBS SAID THE CONCEPT OF A SECOND OPINION, PARTICULARLY IF IT WAS DESIGNED TO GIVE SOME REASSURANCE TO THE PUBLIC, WAS NOT UNAPPEALING.
+WE ALREADY ENGAGE THE ASSISTANCE OF TECHNICAL CONSULTANTS, AND A SIMILAR APPROACH ON THE FINANCIAL SIDE COULD WELL PROVE USEFUL.
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+AT THIS STAGE I MUST STRESS THAT I SPEAK PERSONALLY. IDEA HAS NOT BEEN DEVELOPED WITHIN THE ADMINISTRATION AND IT MAY BE THAT ON CLOSER EXAMINATION IT WOULD BE FOUND TO BE IMPRACTICABLE.+
MR JACOBS SAID HE HAD GIVEN AN UNDERTAKING TO THE FEDERATION AND THE CMA TO LOOK MORE CLOSELY AT THE IDEA AS WELL AS SOME OTHERS THAT EMERGED DURING THE DISCUSSIONS IN ORDER TO SEE WHETHER THERE WAS ANYTHING THAT COULD BE BUILT UPON SO AS TO GIVE THAT REASONABLE ASSURANCE TO THE PUBLIC THAT HE BELIEVED TO BE ESSENTIAL.
TURNING TO THE GENERAL ISSUES RAISED IN THE DEBATE, MR JACOBS SAID THE GOVERNMENT HAD AN OBILGATION TO PROVIDE A MONITORING FACILITY REGARDING CERTAIN UTILITY COMPANIES WHICH HAD BEEN GRANTED MONOPOLY OR SEMI-MONOPOLY STATUS, AND THE SCHEMES OF CONTROL CONSTITUTED ONE ASPECT OF THAT MONITORING PROCESS.
+THE GOVERNMENT'S POLICY IS TO ENSURE THAT THE PRICES THAT THESE UTILITY COMPANIES CHARGE SHOULD BE RELATED TO THE COST OF THE SERVICES THEY PROVIDED.
+BUT, SUBJECT TO THE MONITORING ARRANGEMENTS, THE RESPONSIBILITY FOR A RELIABLE SERVICE AT A REASONABLE PRICE RESTS PRIMARILY WITH THE COMPANY CONCERNED, AND IT IS THE COMPANY THAT IS DIRECTLY ACCOUNTABLE TO ITS CONSUMERS.
HE SAID THE SCHEMES OF CONTROL WERE DESIGNED AMONGST OTHER THINGS TO ENABLE THE COMPANIES TO FINANCE THE EXPANSION NECESSARY TO MEET THE DEMAND FROM CONSUMERS AND TO REMAIN FINANCIALLY VIABLE BY GIVING SHAREHOLDERS SUFFICIENT INCENTIVE TO INVEST.
+SO. EVERY SCHEME OF CONTROL MUST PROVIDE A REASONABLE RETURN TO SHAREHOLDERS ON THEIR INVESTMENT, HE SAID.
MR JACOBS SAID THAT AS POINTED OUT BY THE HON ALLEN LEE AND THE HON WONG PO-YAN, ALTHOUGH THE RATE OF RETURN AS A PERCENTAGE OF THE VALUE OF AVERAGE NET FIXED ASSETS HAD REMAINED STEADY IN RECENT YEARS, IT HAD INCREASED AS A PERCENTAGE OF SHAREHOLDERS' FUNDS.
+THIS MAY APPEAR TO SUGGEST AN OVER-GENEROUS RETURN TO THE SHAREHOLDERS. BUT IT IS NOT AS SIMPLE AS THAT, HE SAID.
*THE PERMITTED PROF IT AS A PERCENTAGE OF SHAREHOLDERS' FUNDS IS NOT THE SAME AS THE ACTUAL DIVIDEND THE SHREHOLDERS RECEIVE, THE MONEY THAT GOES INTO THE POCKET. MUCH OF THE COMPANY'S PROF IT IS RETAINED IN THE BUSINESS AND IS NEEDED FOR FINANCING EXPANSION AND FOR SERVICING DEBT.+
/ON ARRANGEMENĪTS