XN000022-1996-01-24 — Page 35

.9.

I shall talk briefly about electricity supply, telecommunications and then some other government fees and charges which are mentioned in the motion and the amended versions of the motion.

I join my colleagues here today and urged Members to reject the motion and the amendments. This is because the motion urges us to take a course of action which would not be in the long term interests of Hong Kong,

Supply of electricity

I shall start with electricity supply. When the Government considered proposals from our power companies to revise charges, we take into account all relevant factors, social, economic, as well as the long term well-being of Hong Kong. This is because of our power companies have a very important role to play in supporting Hong Kong's economic development.

Our two power companies operate under two Scheme of Control Agreements agreed with the Government. The Government's objectives in negotiating these agreements are to ensure that:

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consumers get a reliable and efficient service - one which will expand to meet increasing demands at a reasonable price;

that shareholders of the company in term get a reasonable return on their investment - this would encourage them to continue to make the necessary investments, particularly those in the longer term;

the companies are also then enable to compete successfully in the financial markets when funds are needed for the expansion programmes; in particular to keep the cost of borrowing down;

the companies by so doing are also permitted to avoid financial difficulties which could otherwise lead to their collapse; and

these objectives are all achieved without any direct subsidy from public funds and with a minimum of governmental interference.

Under the respective Scheme of Control Agreements, the companies have agreed to subject their development proposals and tariffs adjustment to Government approval. There is in return, a formula to determine the maximum level of profit that each company can earn.