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LCQ15: Centralised liquefied petroleum gas supply for public housing estates
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     Following is a question by the Hon Luk Chung-hung and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (November 30):

Question:

     At present, 15 public housing estates under the Hong Kong Housing Authority (HKHA) are installed with centralised liquefied petroleum gas (LPG) (i.e. piped LPG) supply system. The Competition Commission (the Commission) pointed out in its advisory bulletin released in September this year that the arrangements for renewal of piped LPG supply contracts for those estates lacked competition, resulting in the residents being unable to enjoy better terms and services that competition might bring. The authorities responded that they would study and consider the Commission's recommendations and other relevant information in detail, and would review the current policies and arrangements. In this connection, will the Government inform this Council:

(1) whether the authorities have completed the study on the various recommendations made by the Commission; if so, whether they will revise the relevant policies to introduce competition with a view to obtaining better terms and services for the residents; if they will, of the details, and when the relevant work is expected to be completed; if they will not, the reasons for that;

(2) given that as indicated in a paper submitted to this Council by the authorities in July this year, the piped LPG supply contracts for three public housing estates would expire within this year, whether any of these contracts have already been renewed prior to the completion of the aforesaid policy review by the authorities; if so, of the details and the reasons for that; and

(3) given that the Commission has recommended that "HKHA should consider forgoing the practice of treating premium [paid by LPG suppliers] as the key criterion for awarding subsequent contracts and in its place, use LPG prices to be charged to residents to determine the award", whether the authorities will adopt such recommendation with a view to lowering LPG prices, thereby alleviating the burden on the residents; if so, of the details; if not, the reasons for that?

Reply:

President,

     My consolidated reply to various parts of the question raised by the Hon Luk Chung-hung is as below.

     According to the prevailing policy of the Hong Kong Housing Authority (HA), which has been in place for years, if the performance of an existing supplier of centralised Liquefied Petroleum Gas (LPG) in public rental housing (PRH) estate is satisfactory during the contract period, HA will renew the contract with the supplier upon the expiry of the existing contract. This is to ensure safe and stable supply of centralised LPG for the residents. In the past few months, there have been different views in the society about this policy. In this regard, the Housing Department (HD) has explained HA's position at the meeting of the Legislative Council Panel on Economic Development on June 27, 2016 and informed the Panel that HD was studying the latest market situation and the experience in private housing developments, with a view to considering whether there was a need to amend the relevant policy. The meeting also touched upon the Competition Ordinance (Cap 619). HD indicated that it would take into account the advice of the Competition Commission (the Commission) when conducting the study. To facilitate the policy review, HD will also continue to liaise with LPG suppliers and relevant Government departments to collate relevant information, such as the specific impacts on residents arising from a change in the supplier.

     Fully effective since December 2015, the Competition Ordinance provides a legal framework to prohibit and deter anti-competitive conducts in undertakings of all sectors in Hong Kong which would prevent, restrict or distort competition. Although HA is one of the exempted statutory bodies under the Ordinance and is not subject to the regulation of the Ordinance, HA has taken the initiative to follow the rules on competition as stipulated in the Ordinance. On September 7, 2016, the Commission wrote to HD providing its advice on the subject matter. One of the recommendations of the Commission is that HA should consider adopting a competitive process when awarding contracts in the future. This is also in line with the follow-up actions mentioned by HD at the meeting of the Legislative Council Panel on Economic Development in June 2016. Regarding the Commission's other recommendations relating to the specific arrangement of the tendering process, HA will consider them together with other factors when formulating the new policy.

     At present, 15 PRH estates under HA are installed with centralised LPG supply systems. The contracts of three of these suppliers are due to expire this year, among which one contract has already been agreed earlier (in April 2016) in accordance with the prevailing policy.

     We will continue to follow up the discussion at the Legislative Council Panel on Economic Development meeting held in June 2016 and, based on the recommendations of the Commission in September 2016, further liaise with the LPG suppliers and relevant departments to come up with feasible proposals. We will consider various policies, arrangements and implications (including substantial impacts on households) comprehensively and submit the analysis and findings of the study to the relevant committee of HA for discussion. We expect the process will take a few months.
 
Ends/Wednesday, November 30, 2016
Issued at HKT 11:33
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