CO129-611-1 Hong Kong Electric & China Light & Power Company Ltd. 1-12-1945 - 2-5-1947 — Page 44

(C.A.A. 1).

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ATE OF CIVIL AFFAIRS

C.A.4.

15.FEB 1946

19165

WAR

3 (CAA No. 8300 45)

TO

MEGO. FILE

CAL

Weir,14 FEB 1946

For dicial action

CIVIL AFFAIRS ADMINISTRATION,

Bust be acknowledged

10

44

Hong Kong & Shanghai Bank Building,

Hong Kong.

15th January 1946

CAH

I have the honour to transmit, for your consideration and that of the Secretary of State for the Colonies, copies of a letter which has been addressed both to the Hong Kong Electric Company and the China Light and Power Company. The terms of the agreement under which it is proposed that the Administration should operate these Companies for a period of six months are set out therein.

2. When Hong Kong was re-occupied no current was being generated on the Hong Kong side of the harbour though the Power Station in Kowloon was still functioning, the boilers having been converted to wood fuel. The Japanese had laid a cable as a tie-line across the harbour so that the Kowloon Station could also supply Hong Kong. This precarious arrangement was continued by us during the opening days of the re-occupation but the tie-line soon parted and limited power was supplied to the island by a submarine until the Hong Kong Electric Company's Station came into operation.

3. There were also difficulties in the initial stages over the payment of personnel. Moreover, the only supply of coal was under the control of the Administration. This was scanty and the cost was extremely high. The Companies were unable to operate unaided and they could not in any case charge economic rates. In view of the low initial demand for power and Tight and the high costs involved such rates would necessarily have been several hundreds per cent above the pre-war cost and it was felt that, if the Colony was to make a reasonable recovery, rates must not be allowed to exceed the 1941 figure plus 50%. In all the se circumstances the Administration decided to take over the control.

4. The matter was exhaustively discussed with the Companies' representatives and after protracted negotiations an agreement has been drafted, the terms of which are contained in an enclosure to this despatch. The Companies at one stage pressed for provision for the renewal of the agreement beyond the initial period of six months but it is obviously in the interests both of the Administration and of the Companies that the latter should stand on their own feet as soon as possible. Companies therefore were finally persuaded to withdraw their request for a renewal clause.

The

5.

It is of interest to compare the final draft agreement with the proposals first put forward by the Companies. These initial proposals are contained in a memorandum of which copies are attached drawn up by Mr. Lawrence Kadoorie of the China Light and Power Company.