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Following is a question by Hon Chan Hak-kan and a written reply by the Secretary for the Environment, Mr Edward Yau, in the Legislative Council today (April 28):
Question:
It has been reported that Chevron Hong Kong Limited ("Chevron") has decided to gradually terminate the business of domestic liquefied petroleum gas ("LPG") supply in Hong Kong, including the supply of domestic central LPG, which is operated by its subsidiary, the Caltex, and it is estimated that quite a number of users in both public and private housing estates will be affected. In this connection, will the Government inform this Council:
(a) whether it knows the information on the housing estates affected by the aforesaid incident;
(b) when the authorities received the notification from Chevron about the aforesaid termination of business; why they have not announced this immediately and taken the initiative to contact the affected housing estates;
(c) whether it knows if any of the other LPG suppliers has expressed willingness to take over the supply of domestic central LPG to the affected housing estates; if so, of the details; if not, whether the authorities will request Chevron to continue to supply domestic LPG to its existing users until a new supplier has been identified; if they will not make such an arrangement, of the reasons for that, and how they assist the affected households;
(d) whether it will consider entering into any agreement with the new supplier to ensure that the supplier will supply LPG at reasonable prices; and
(e) of the authorities' contingency plan to ensure that when ultimately no other supplier is willing to take over the supply of LPG, there will be continuous supply of gas to the affected households; whether the authorities will consider inviting the Hong Kong and China Gas Company Limited to take over the supply of domestic gas; if they will, of the details (including details about the necessary conversion works, and which party will bear the costs of the works)?
Reply:
President,
(a) The affected housing estates are set out in the Annex.
(b) Upon receiving notification from Chevron Hong Kong Limited (Chevron) on the termination of Carltex's cylinder LPG business and most of its central LPG business in Hong Kong, the Administration has immediately requested Chevron to put in place proper handover arrangement to ensure stable gas supply to the households. The company has also been requested to notify stakeholders and affected households in a timely manner. Chevron agreed to follow up accordingly to minimise any inconvenience to the households.
(c) We understand that individual gas supply companies have expressed interests in taking over the domestic central LPG supply in these affected public and private housing estates. The Housing Department (HD) will invite gas supply companies to submit tender bid for the central LPG supply contract for the affected public housing estates shortly. Chevron is assisting the management companies and Incorporated Owners of the affected private housing estates, as regards the transitional arrangements for new gas supply companies to take over the business. In case a longer handover period is required, Chevron agreed to handle the issue in a flexible manner where possible to ensure an uninterrupted LPG supply.
(d) The current pricing mechanism of domestic LPG has been voluntarily adopted by Shell Hong Kong Limited since 1999 so as to enhance the transparency in pricing. Under this mechanism, the company will forecast the import prices of the coming three months in light of the latest international LPG price information, and make positive or negative adjustment for any variation between the actual import prices and the import prices as forecasted in the previous review, with a view to setting LPG price for the coming three months. We shall continue monitoring whether the adjustment in domestic LPG price is reasonable in light of the movements in international LPG prices and local import prices.
As regards domestic central LPG supply for HD's public housing estates, the supply contracts specify that the LPG price should not exceed the prevailing private market price, i.e. the price paid by other central LPG users including those living or operating business in private properties. Under the contract, HD can issue warning letters or even terminate the LPG supply contract should the LPG suppliers breach this term. In awarding new LPG supply contracts, HD will take into account the track record of the LPG suppliers, including whether they have charged over the prevailing private market price. The LPG supply contracts also stipulate that residents have the right to use fuels other than central LPG, such as electricity or cylinder LPG.
(e) The Administration will continue to closely monitor the handover of LPG supply to new gas suppliers at the affected public and private housing estates to ensure a smooth transition. Assistance will be provided where needed.
As regards switching from central LPG to town gas, a number of technical issues have to be addressed. For instance, all LPG appliances have to be modified for using town gas, some of them may have to be replaced in the absence of the required parts for modification. There may be interruptions of gas supply for conducting the conversion works of the gas supply system. For housing estates not covered by town gas supply network, connecting pipes to the town gas network have to be laid. Gas main, service pipes and installation pipes may need to be replaced. The affected housing estates should take care of relevant technical issues in considering the switching to town gas.
Ends/Wednesday, April 28, 2010
Issued at HKT 16:01
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