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Following is a transcript (English portion) of a media stand-up session by the Secretary for the Environment, Mr Edward Yau, after attending two radio programmes this morning (January 8):
Reporter: How confident are you that a double-digit cut in basic tariffs can be achieved?
Secretary for the Environment: In this agreement, we have in fact made substantial reductions in the permitted rate of return of the two companies, from 13.5% down to 9.99%, which will mean a substantial reduction in the tariff payments received by the two companies. That can translate in our calculations to be a double-digit reduction (according to the 2006 figures) when the new SCAs kick in. We have commitments from the two companies that they will make these adjustments right at the beginning of the new agreements.
Reporter: Why do you think the rate of return can't be lowered, and why can't the agreement be shorter than 10 years?
Secretary for the Environment: The agreements have in fact brought a reduction in tariff which means a $5 billion annual reduction in terms of tariff payment received by the two companies. The tenure has also been shortened from the original 15 years down to 10 years, allowing us to have flexibility, either to continue for another 5 years or prepare for any other changes. So, in these two respects, the agreements have in fact achieved a reduction and also provided flexibility for the government to consider other open market measures.
(Please also refer to the Chinese portion of the transcript)
Ends/Tuesday, January 8, 2008
Issued at HKT 15:03
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