XN000022-1991-11-13 — Page 5

WEDNESDAY, NOVEMBER 13, 1991

IN THIS WAY, THE GOVERNMENT SEEKS TO SAFEGUARD THE INTERESTS OF SCHEME CONSUMERS. SOMETIMES THE TERMS OF THAT FRANCHISE WILL EMBODY A

ALWAYS OF CONTROL (OR PROFIT CONTROL SCHEME) BUT THIS IS BY NO MEANS

FRANCHISES BUT NO THE CASE. FOR EXAMPLE THE FERRY COMPANIES HAVE

COMPANIES ARE SUBJECT ΤΟ SCHEME

CONTROL, WHEREAS THE TWO BUS OF SCHEMES OF CONTROL AS PART OF THEIR FRANCHISES.

THE

J

KONG.

ON

DO NOT ENJOY AN COMPANIES, POWER

THE OTHER HAND, EXCLUSIVE FRANCHISE - THERE IS NOTHING TO PREVENT A COMPETITOR SETTING IN UP A BUSINESS TO GENERATE ELECTRICITY ANYWHERE IN HONG

AND PRACTICE

THE OF SCALE, LAND CONSTRAINTS HOWEVER, ECONOMIES

ΤΟ LIKELY SUBSTANTIAL

MILITATE INVESTMENTS INVOLVED ARE UP FRONT

AS THE TWO EXISTING POWER AGAINST A PROLIFERATION OF POWER COMPANIES.

AREAS WHICH COMPANIES ENJOY DE FACTO MONOPOLIES IN THE GEOGRAPHICAL

INTO SCHEMES THEY

OF CONTROL GOVERNMENT HAS ENTERED THE SERVE,

PROPER BALANCE IS AGREEMENTS WITH

IN ORDER TO ENSURE THAT A THEM

AND THAT STRUCK BETWEEN THE INTERESTS OF CONSUMERS AND SHAREHOLDERS THERE IS AN AGREED BASIS FOR DETERMINING MAXIMUM PROFIT LEVELS.

MONITOR CAREFUL

THE GOVERNMENT TAKES SERIOUSLY ITS RESPONSIBILITIES TO UTILITIES. IT DOES SO THROUGH THE ACTIVITIES OF PUBLIC

THE COMPANY SCRUTINY OF FINANCING PLANS WHICH MUST BE SUBMITTED BY

ON APPROVAL OF TARIFFS. BUT IN THROUGH REGULATION OF PROFITS

HAVE REGARD TO ADMINISTERING SUCH AGREEMENTS, THE GOVERNMENT MUST

THERE IS A CONSUMERS' INTERESTS IN THE WIDEST SENSE. TOO OFTEN,

IN THE MISCONCEPTION THAT THE INTEREST OF THE CONSUMERS LIES SOLELY

BE ONLY MAINTENANCE OF LOW FARES AND TARIFFS. BUT THIS CANNOT CRITERION BY WHICH TO ASSESS THE EFFECTIVENESS OF SUCH AGREEMENTS. MAKES NO SENSE AT ALL TO FORCE THE PROVIDERS OF PUBLIC KEEP PRICES BELOW WHAT IS NECESSARY TO COVER THEIR COSTS AND

HAS REASONABLE RETURN TO THEIR SHAREHOLDERS. AS EXPERIENCE OVERSEAS

THE SETTING OF SHOWN, OVER ZEALOUS REGULATION AND INTERVENTION IN

IN THE FACE OF DECLINING RETURNS PRICES CAN HAVE DISASTROUS RESULTS.

INVEST IN INCREASINGLY UNWILLING TO SHAREHOLDERS

NECESSARY BECOME

CONSUMER LOSES PLANT AND EQUIPMENT, SERVICE STANDARDS DROP AND THE OUT.

SERVICES

IT ΤΟ PAY A

TO PLAY THEN WE REASONABLE

FROM

VIEW OF COMMUNITY AS A GOVERNMENT WE MUST TAKE A LONG TERM INTERESTS. IF WE WANT TO SEE THE PRIVATE SECTOR CONTINUING ITS CURRENT MAJOR ROLE IN THE PROVISION OF PUBLIC SERVICES MUST RECOGNIZE THAT SUCH COMPANIES MUST BE ALLOWED TO EARN PROFITS IN ORDER TO BE ABLE TO ATTRACT THE CONTINUING INVESTMENT

SERVICE ARE SHAREHOLDERS NECESSARY TO ENSURE THAT HIGH STANDARDS OF

THE MAINTAINED. DECLINING PRIVATE INVESTMENTS INEVITABLY MEANS THAT BURDEN

OPERATING FALLS SERVICES KEEPING

PUBLIC ESSENTIAL ON THE

DETRIMENT OF SOCIAL AND INCREASINGLY INFRASTRUCTURAL PROGRAMMES.

IS

OF

то TAXPAYER

THE

AGREEMENTS WHICH THE WARRANT

ONE OF THE ESSENTIAL FEATURES OF FRANCHISES AND SOC THAT THEY ARE GRANTED FOR A FIXED TERM AT THE END OF GOVERNMENT REVIEWS VERY CAREFULLY WHETHER CIRCUMSTANCES STILL THE CONTINUATION OF SUCH RIGHTS AND IF SO ON WHAT TERMS. IN CARRYING OUT THIS REVIEW, WE TAKE VERY SERIOUSLY THE VIEWS OF THIS COUNNCIL AND THE PUBLIC.

/I SHOULD