CO129-611-1 Hong Kong Electric & China Light & Power Company Ltd. 1-12-1945 - 2-5-1947 — Page 66

ཡ་་་ ་

COPY

MEMORANDUM

66

1.

OPERATION OF HONG KONG UTILITY AND SEMI UTILITY

COMPANIES DURING REHABILITATION PERIOD.

With a view to restoring normal conditions in the Colony as soon as possible, certain members of the Hong Kong Planning Unit have expressed the opinion that all companies in Hong Kong should be operated on a commercial basis as soon as possible.

>

2.

This policy is also eminently desirable from a shareholder's point of view since it leaves the companies under the control of their Boards of Directors rather than under a department of Government.

3.

The chief reasons which render true commercial operation impossible at the present time are:-

4.

(a) Government's evacuation policy, which is of

first importance, but which has left the companies with insufficient civilian staff to take over complete operation.

(b) The impossibility of fixing rates of prices

which would give a fair return to shareholders and which would at the same time support Government's efforts to keep down the cost of living.

(c) It would obviously defeat the object of any

Rehabilitation Scheme to ask the very hard-hit Utility and semi-utility companies to operate at a loss in order to render possible the greater necessity of keeping the cost of living down during the period it will take for prices to find their true level.

No Board of Directors could conscientiously agree to this.

With a view to bringing about the early commercial operation of the companies concerned in theory if not in fact the following general formula is submitted for consideration:-

5.

-

(a) That the companies concerned should operate

under the control of their Boards of Directors.

(b) That the companies concerned should enter into

an agreement with Government for a period of six months with option of renewal for a further period, whereby they will operate entirely for Government on a cost plus profit basis.

COSTS shall include:

(a) All operating charges.

(b) All salaries and wages including leave pay

whether paid to the Companies' Civilian Staff or to Military personnel now on loan.

(c) Depreciation which shall be calculated at the

full rates provided for in the Schedule of War Taxation (1941).

(a) All immediate repairs and renewals necessary

with a short-term policy in view.

"nte::

erv endeavour'

made t

~ffect