TNAG-0947-FCO40-1166-Oil-developments-in-and-around-Hong-Kong-1980 — Page 1

HKKIGZMEMORANDUM FOR EXECUTIVE COUNCH

PROPOSED PRIVATE TREATY GRANT OF A SITE

AT CHAI WAN TO THE CHINA RESOURCES COMPANY FOR AN OIL STORAGE DEPOT

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of 40

LAJ 25.3

SITEK

Introduction

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This memorandum seeks advice as to whether a grant by private treaty should be made of a site of about 6 150. m2 (66, 198 sq ft) of land (shown edged black on the plan at Annex A) at Chai Wan, on the basic terms in paragraph 13 below, to the China Resources Company (CRC) for construction of an oil storage depot.

Background

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During 1973 and 1974, the Government held negotiations with CRC on the possibility of its assisting Hong Kong to make up the short- fall in supplies of oil products. In response, CRC said that, if future supplies from China were to be assured, they must have separate bulk storage and distribution facilities. So, on the advice of Members, the Government granted two sites at Tsing Yi and Shatin by private treaty to CRC. In respect of the premia to be charged, Members were informed that:

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!!

because of heavy expenditure required for

tank facilities and because of 'China's willingness to help Hong Kong', the price of the land has become a sensitive issue. In the light of the prevailing land policy, the terms proposed for the land to be used for oil storage (at $10 a square foot) are lower than the Government could justify in normal circumstances but are the highest which are acceptable to China Resources Company.

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The established oil companies objected strenuously to the favoured terms for CRC and in 1975 the then Secretary for the Environment confirmed to them that "any further opportunity given to China Resources to acquire land for marketing activities would be offered on similar competitive terms to other oil marketers also". Subsequently, when seeking Members' advice on an extension to the Shatin site, Members were informed of this assurance given to the oil companies.

G.S. 166

CONFIDENTIAL