Electricity mad Hong Kong

By Uncle Cheng

Is air pollution shaping up to be the biggest threat to Hong Kong’s continued prosperity? I think so. On the Mainland the pollution problem is different because it includes contamination of drinking water and chemical poisoning of the earth. We in Hong Kong are in a sense lucky because our pollution is overwhelmingly a matter of air pollution.

Even better news for us is that a few simple steps will greatly reduce existing air pollution. Top of the list of things that the government must do is to scrap the present incentives which encourage our two electricity generating companies to overbuild and over-produce power. Secondly, we urgently need tough laws to enforce energy saving throughout society.

Up to now the two power generators have enjoyed an almost utopian existence. According to their agreements with the government they are allowed to earn an incredible 13.5 percent return on their investments in fixed assets. The result is that Hong Kong has an abundance of electricity but at too high a price. It is an insane arrangement which turns normal economic rules upside down.

When did you hear of CLP or Hongkong Electric encouraging the power-saving strategies that are common in other advanced economies? Never, because they can maximise their profits by massive overbuilding. CLP’s proposed multi-billion dollar natural gas terminal on Soko Island is a perfect example. It is unnecessary because gas can be piped from the Yacheng field on Hainan Island much more cheaply.

Our power companies are on a constant investment binge which results in an overproduction of electricity. They can get rid of some of the excess power by offering huge discounts to the biggest users while small users have to pay the full whack. CLP can also get rid of a fifth of its power by selling it to the Mainland.

Quite how the Government got itself into this mess has its origins in the old colonial days. The scheme of control is a massive intervention in what should be a free market. For example, in every other country I know of, electricity is priced according to the time of day. So power at night is cheaper than daytime power, which encourages people to switch on at night and switch off during the day. But not in Hong Kong because such pricing might reduce demand, and less demand would mean less opportunity to build more generating capacity and thus less profit (remember that tantalising 13.5 percent return on fixed assets).

Back to our horrible air pollution. Nobody denies that burning fossil fuels to make our electricity is a major contributor to our murky skies. Why does the government not do something about it?

I believe that the government is way behind public opinion on this issue, as it is on many environmental questions. There is a growing groundswell of opinion throughout society that demands the government must do whatever is necessary to roll back the clouds of pollution and reveal the hidden blue skies of yesteryear. Opening up electricity generation to the normal laws of supply and demand would be a promising first step.

Vertigo?

This must one of the most interesting building designs in Singapore. It's a project at the junction of Cairnhill and Scott Road by Ng Teng Fong's Far East Organisation. They look like floating towers.

Another interesting design in Singapore is Keppel Land's Reflections at Keppel Bay. The apartment blocks look like they are bending.

The buildings will definitely add greater vibrancy to the Singapore skyline. But will they cause vertigo to occupants?

Bullet Train, Part 2

Malaysia says it will soon talk to Singapore on a private sector plan to build a bullet train between Kuala Lumpur and Singapore on Wednesday, commissioning a study of the proposal, state news agency Bernama said on Wednesday.

According to reports, Malaysian property and utility firm YTL Corp Bhd has proposed to build and run an 8-billion-ringgit (US$2.2 billion) bullet train between KL and Singapore. No other details are available.

The YTL plan, which first surfaced last year, has generated the usual debate about the need for such a service, as evidenced by the responses to a news article posted on Malaysia Today.

There is definitely a need for a fast train service between the two capitals. Keretapi Tanah Melayu (KTM service as seen in this pix) can take more than eight hours to connect KL and Singapore. Driving takes half the time. Perhaps, the old KTM train service should be dedicated to ferrying non-perishable goods like fertiliser.

The two countries must see a faster train service -- that can cut travel time to between 90 minutes and 2 hours between the two capitals -- as beneficial to the PEOPLE of the two countries and not be sidetracked by smaller and technical issues or "balance of benefits".

Although a faster train project is necessary, there will be many complications as mentioned in an earlier posting.

How to live in JB with so much crime!!!!

The southern Malaysian city of Johor Baru is just next to Singapore but they are definitely worlds apart. Unlike Singapore that is very safe, the crime level in JB doesn't seem to be abating despite efforts to beef up security in the state.

Former Singapore PM Lee Kuan Yew was definitely correct when he said in a defamation suit in 1997 that the Malaysian state was "notorious for shootings, muggings and car-jackings". Although Kuan Yew had expunged the remarks in order to maintain friendly relations between Singapore and Malaysia, the remarks still strike a chord among residents in the state.

Third Aunt was robbed recently. Sixth Aunt was also robbed recently by a knife-wielding man in front of her house behind the popular Holiday Plaza mall. She highlighted this story in The Star on March 19 in which a businessman -- Low Ee Chong (as shown in The Star pix) who is the brother of Pengkalan Rinting state assemblyman Low Teh Hian -- was badly injured and robbed in front of his house.

The headline of Sixth Aunt's e-mail: How to live in JB with so much crime!!!! Indeed. There are many other horror stories.

But it's not time to talk anymore. It's time to go on a massive anti-crime blitz in the MSC state -- not the Multimedia Super Corridor but Mugging, Shooting and Car-jacking state.

Cheers to NEWater

A few days ago, Singapore trumpeted the achievement of its target of having NEWater or recycled water satisfy 15 percent of current needs and is now aiming for 30 percent by 2011.

Singapore said this when Prime Minister Lee Hsien Loong (centre in ST pix) opened the Keppel Seghers Ulu Pandan NEWater plant on March 15. The new plant, Singapore’s fourth and largest NEWater plant, has a capacity of 32 million gallons of NEWater per day (mgd). And the price of NEWater will be slashed to $1 a cubic metre from $1.15 from April 1.

It sounds like a big jump in the proportion of NEWater in Singapore's national water equation. Probably true.

But what was left unsaid is the expiry of the first Malaysian contract to sell raw water to Singapore in 2011. Of course, the ratio of NEWater and other local sources in the total water pie will go up when the first Malaysian contract lapses.

The contract is quite sizeable as Singapore is allowed to draw some 100 mgd from Johor -- equivalent to the capacity of more than three NEWater plants.

Another Malaysia-Singapore contract, which will expire in 2061, has a provision for 250 mgd. Although Singapore doesn't use up the entire entitlement as Johor River cannot yield the required amount, the two contracts account for more than 40 per cent of Singapore's estimated current water needs.

Singapore has been ramping up production of its own water to cut its reliance on Malaysian water ever since the two countries had a major tiff over the water issue in the late 1990s.

While Singapore is spending more to build new water treatment plants and enlarge its water catchment areas, it will continue to pay 3 Malaysian sen per thousand gallons for the next 54 years under the second water contract.

The price of 250 mgd under the second contract works out to a mere RM7,500 per day or RM2.7 million per year or RM148 million (about S$66 million) for the next half a century. Of course, this does not include the capital expenditure of more than S$1 billion by Singapore for water projects in Johor over the years. For the purpose of comparison, the first desalination plant in Singapore, which generates only 30 mgd, costs S$250 million.

Technological advancement will continue to drive down the price of recycled water in Singapore but will it ever bring it down to as low as 3 sen per thousand gallons in the next 54 years?

Highly unlikely.