CO129-611-1 Hong Kong Electric & China Light & Power Company Ltd. 1-12-1945 - 2-5-1947 — Page 45

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6.

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Under Clauses 2 and 3 of the agreement,

the Administration will meet the operating costs and will receive all the earnings. Electricity accounts have been collected with effect from the 1st October based on a charge of 1941 rates plus 50%. It is hoped that by the end of February when the agreement expires, the price of coal will have come down sufficiently to make it possible for the Companies to continue at or near this rate. Unfortunately, supplies of coal are still inadequate and it probably will not be possible for the Hong Kong Electric Company to take the full load which is offering on the Hong Kong side until some spare parts for their plant are received. Before the end of February therefore it will be necessary to examine the question of rates which the Companies will find it necessary to charge. If any considerable increase over the present rates is proved to be necessary some form of subsidy on coal may be necessary for a few months longer.

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With regard to Clause 4, the Hong Kong Electric Company is pressing for some modification of the portion of this Clause which absolves the Administration from responsibility for the payment of personnel who are absent from the Colony on leave. have represented and the China Light and Power Company They has supported these representations that it would be reasonable for the Administration to meet the leave expenses of that portion of the staff which would normally be absent under peacetime conditions in the course of a period of six months. They consider that in so doing the Administration would not be paying for duplicate staff. In accepting the agreement as it stands the Companies specially asked that this point should be referred to His Majesty's Government for a decision.

8. The amount involved is not very considerable as the Companies employ some 75 persons with overseas leave privileges. Conditions vary some what but such employees receive six or eight months' leave including the voyage pe riod after a tour of four years. It is felt however that the Companies have been treated reasonably and this further concession is not recommended. Not only does it appear to me prima facie unjustifiable but, if made, may easily lead to complications in the negotiation of similar agreements with other public utility companies in the Colony.

The y

9. With reference to Clause 5 the Companies had first pressed for a sum to be paid to them on the expiration of the agreement in respect of depreciation. suggested that this sum should be fixed by mutual agreement and that if no agreement were reached the matter should be submitted to arbitration. From the point of view of the Administration an indeterminate liability of this sort was very unsatisfactory and if, at the end of the period, the Companies were disappointed in the amount of the award, there would inevitably be mutual recrimination. Various suggestions for fixing definitely the liability of the Administration in this regard were considered and Clause 5 represents the solution which was considered most satisfactory. Under it the Administration is only concerned with plant which