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1. Swire knocked out in first round

2. Stop tendering of Central Police Station site, Legco panel urges

3. Grand hotel plans evaporate

4. Sino Land secures $210m site

5. LC: Statement on West Kowloon Cultural District project

6. Transcript of press conference on development of West Kowloon Cultural District

7. Public consultation on WKCD development proposals to launch in mid-December

8. Pollution caps planned

1. Swire knocked out in first round
GARY CHEUNG, SCMP 10 November 2004

No-canopy design for cultural area is rejected; a lone bidder also loses out.

The proposals for developing the West Kowloon cultural district put forward by Swire Properties and a mystery individual bidder have been rejected in the first stage of the government's assessment of the massive project.

Chief Secretary Donald Tsang Yam-kuen told the Legislative Council three of five proposals had been shortlisted for further assessment and public consultation, which starts in the middle of next month.

The three shortlisted bidders are Dynamic Star International, a Cheung Kong (Holdings) and Sun Hung Kai Properties joint venture; Sunny Development, a consortium formed between Sino Land, Wharf (Holdings) and Chinese Estates Holdings; and World City Culture Park Limited, a subsidiary of Henderson Land Development.

Swire Properties' proposal was rejected by the assessment committee because it does not include the soaring transparent canopy, the centrepiece of the original design by renowned architect Lord Foster, as required by the government's invitation for proposals.

Mr Tsang said Swire's proposal failed to provide core arts and cultural facilities, such as a museum cluster and art exhibition centre in the West Kowloon cultural district in accordance with the government's requirements.

"Swire Properties scatters the required arts and cultural facilities in Tsim Sha Tsui, Tamar and [at] Fenwick Pier, which will not create the clustering effect envisaged by the original design," he said.

A proposal by individual bidder Lam Sze-tat was also excluded from further assessment.

Mr Tsang reiterated the arts hub was not a property project, and denied it would be "another Cyberport". That development was criticised for the absence of open tendering.

A public consultation exercise on the West Kowloon project will start in the middle of next month. Exhibits from the three shortlisted bidders will be displayed for six weeks at the Hong Kong Science Museum in Tsim Sha Tsui. The government will also hold discussion forums in various districts.

Swire Properties said the company had always supported the need for transparency and full public consultation for major projects of public interest.

"In view of the small number of submissions, Swire believes that the interests of the public would best be served if all submissions are presented so as to elicit constructive community dialogue on the different developers' approaches," it said.

Gordon Ongley, director and general manager of Swire Properties, said: "Our concept provides a viable alternative for the community's consideration."

Mr Tsang said construction of the project was expected to start in April 2007 and take four years.

2. Stop tendering of Central Police Station site, Legco panel urges
KLAUDIA LEE, SCMP 10 November 2004

A Legislative Council panel yesterday passed a motion urging the government to halt the tendering of the Central Police Station compound amid rising concerns about protection of the historic site.

Lawmakers on the home affairs panel said the tendering process should be halted until the government reached a decision on how to preserve heritage buildings. Many panel members are against demolishing buildings in the compound.

Seventeen of the 27 buildings - on the site of the Central Police Station, Victoria Prison and the former Central Magistracy - are on the preservation list. The Antiquities Advisory Board has said a building at the entrance of the Victoria Prison does not match the architectural style of the surrounding area.

Most of the nine conservation and architectural groups, as well as Central and Western District councillors, invited to the panel also called for greater public participation in assessing tenders and monitoring developments.

Assistant commissioner for tourism Patricia So Pui-sai said no concrete timetable was set on the tendering. "We have all along listened to the opinions of society and will carefully consider the tendering arrangements. The Antiquities Advisory Board has played an active role in every process," Ms So said.

The motion, moved by independent Albert Chan Wai-yip, was passed by five members, with two abstentions. It was ahead of a motion to be moved in Legco today by Democratic Alliance for Betterment of Hong Kong lawmaker Choy So-yuk calling for the site's conservation and a comprehensive policy on the city's heritage.

"The government should have a clear policy after finishing the consultation before considering how to handle its development," Democratic Party vice-chairman Albert Ho Chun-yan said.

A three-month consultation began in February to gauge public views on the preservation of heritage buildings. A second-stage consultation is to start early next year.

Ronald Lu, Hong Kong chapter president of the American Institute of Architects, said he was concerned with the city's disappearing heritage and urged the government to show its concern.

Conservation activist Kam Nai-wai said the site should be run on a non-profit basis to allow access to the public.

3. Grand hotel plans evaporate
SANDY LI and PEGGY SITO, SCMP 10 November 2004

High land premium charges are forcing developers to change - or consider changing - plans for their industrial sites. Many who had originally wanted to build hotels are postponing their projects or opting to create commercial premises in view of the good prospects in the office and retail property markets.

Chan Wing-kee, managing director of Yangtzekiang Garment Manufacturing, said his company was considering abandoning plans to redevelop an industrial site in San Po Kong for hotel use.

"We have not started discussing with the government [land premium payment], but if the prices are too high, we would prefer to leave the site vacant," Mr Chan said.

In August, the company received approval from Town Planning Board to go ahead with the building of a 27-storey hotel with a maximum 900 rooms on a site in Tai Yau Street, San Po Kong. This site is now occupied by a factory.

Lee Shau-kee, chairman of Henderson Land Development, recently voiced concerns that the land premium for hotel redevelopment was unreasonably high, rendering unviable the company's hotel redevelopment plans at industrial sites in Kwun Tong and San Po Kong.

Industry sources said developers were urging the Real Estate Developers Association (Reda) to discuss the issue with the Lands Department.

Neither Reda nor the Lands Department was available for comment yesterday.

Meanwhile, other developers are also being tempted by the optimistic outlook in the office and retail sector.

Sun Hung Kai Properties (SHKP) has scrapped its hotel plan in Cheung Sha Wan and instead has turned the property into a 24-storey office building.

And in Kwun Tong, the developer has chosen to build an office tower with a gross floor area of 700,000 square feet, rather than a hotel, in the sixth phase of the Millennium City development.

Kerry Properties abandoned its hotel plan for Enterprise Square Five, Kowloon Bay, and is turning the property into a shopping arcade.

"We believe the office and retail market has greater potential for future growth," said a Kerry Properties spokeswoman.

Enterprise Square Five, which is due for completion in 2006, will comprise a 19-storey, one-million-sqft shopping centre and 500,000 sq ft of office space.

Jones Lang LaSalle's regional valuation director Lau Chung-kong expected the premium charge for converting land from industrial to office usage would be about "several hundred dollars" per square foot, compared with more than the $1,000 per square foot the government is charging for hotels.

Developers were also factoring in the bright forecast for the office market over the next two years and modifying investment strategies accordingly, he said.

According to CB Richard Ellis, the office leasing and investment markets remained active in the third quarter, with grade-A rents up 8.9 per cent and prices up 5 per cent from the previous quarter.

Retail rental grew an average 2.9 per cent in the third quarter.

Property consultants believe that more developers will be either deferring their hotel-building plans or opting for commercial premises if there is no breakthrough in the land premium issue.

Brenda Au Kit-ying, acting chief town planner, Planning Department, said another potential hotel project in Kwun Tong might be scrapped but gave no details.

Since 2002, the Planning Department had approved 38 applications for hotel developments with a potential supply of 19,000 rooms.

Ricky Wong, assistant director at Wharf (Holdings), said: "We hope the government will give us more incentives to encourage the land use conversions."

Wharf has secured Town Planning Board approval to build a 1,400-room three-star hotel on an industrial site in Tsuen Wan.

The financial viability of the proposed $1 billion hotel project depended on how the land premium discussions with the government turned out, he said.

He understood that developers liked the idea of the early returns from office developments, compared with hotels.

"Office premises will yield immediate revenue because they can be put up for sale. It takes years for hotels to break even," he said.

4. Sino Land secures $210m site
Raymond Wang, The Standard 10 November 2004

Mid-tier developer Sino Land has beaten 11 rivals including larger developers Henderson Land Development and Cheung Kong (Holdings) to secure a residential-commercial site in Sham Shui Po for about HK$210 million.

The owner, CLP Holdings, also received bids from developers such as Asia Standard International and Chuang's Consortium International for the 7,200 square feet former power distribution station site at 305 Castle Peak Road, market sources said. The tender closed last month.

Sino Land confirmed its winning bid but did not reveal details.

CLP Holdings said the site has been sold through tender agent CB Richard Ellis.

Building plans for a 28-storey residential-commercial project on the site was approved, which will provide 112 residential units measuring more than 500 sq ft each.

The project will have a total gross floor area of 64,700 sq ft.

Sino Land's bid was HK$3,000 per square foot, sources said.

Last month, Sino Land secured the Shell petrol station site in Wan Chai for more than HK$200 million.

Apart from the Sham Shui Po and Wan Chai sites, Sino Land has bought five development sites in Hong Kong and China so far this year.

Those include a luxury residential site on Conduit Road, Mid-Levels, two projects on Yeung Uk Road in Tsuen Wan and Sham Shui Po, and two projects in Shenzhen and Sichuan.

Meanwhile, a private tender for K Wah Bank Centre, an office building in Sheung Wan, has attracted five bids, with the highest offer price of HK$310 million or HK$4,263 psf.

The tender closed on Monday and results are expected later this week.

5. LC: Statement on West Kowloon Cultural District project
Hong Kong Government, 10 November 2004

Following is the statement (translation) on the West Kowloon Cultural District project delivered by the Chief Secretary for Administration, Mr Donald Tsang, in the Legislative Council today (November 10):

Madam President and Members,

The West Kowloon Cultural District (WKCD) project has been a subject of concern to the Legislative Council (Legco) and various sectors of the community. Today, I wish to brief Members on the results of stage one of the assessment process regarding this project and our next steps, including arrangements for public consultation.

The idea of developing a world-class cultural district first arose in 1996. In that year, the Hong Kong Tourist Association conducted an extensive survey of visitors coming to Hong Kong and a proposal was put to Legco in 1998 that a new cultural venue should be built. In his Policy Address for that year, the Chief Executive, Mr Tung Chee Hwa, said Hong Kong would be developed into Asia's arts and cultural capital. The construction of the WKCD was one of the key initiatives.

We began working on ideas for the WKCD project in 1998. It is now six years on. The Government has consulted Legco and the relevant sectors on various aspects of the project. On November 26, 2003, I spoke at length on the project design, development method and consultation arrangements during Legco's motion debate on the subject, and eventually got the support of the Legco. I won't repeat them here.

Between December last year and March this year, the Government held widespread consultations with the arts and cultural sectors as well as professional bodies. We listened to views on the contents of our Invitation for Proposals (IFP), including the assessment criteria. We will certainly refer to these valuable views in assessing the proposals.

In building the WKCD, the Government seeks to enhance the quality of life of the public by providing world-class visual and performing arts programmes in facilities that are state-of-the-art. The WKCD will boost Hong Kong's status as a world city. Financial centres like New York and London enjoy their standing as glamour destinations thanks to the great importance they attach to the development of art and culture, including architecture.

With its unique landmark design and the abundance of arts, cultural and entertainment events on offer, the WKCD will reap considerable economic benefits for Hong Kong, including attracting more tourists to visit and spend money in Hong Kong. The construction of the WKCD will also create a lot of employment opportunities, including 500 professional posts in the short term and at least over 5 000 vacancies for construction workers over six consecutive years. In the long run, this project will create for the local job market over 1 000 posts engaged in the operation and management of the arts and cultural facilities in the district.

Result of the screening

The Government issued the IFP for the WKCD in September last year which attracted enterprises and consortiums. At the time, we called on the developers to enter into partnerships with renowned and experienced local and overseas arts and cultural bodies. This shows that we not only consider the project as a unique architectural, arts and cultural icon, but also attach great importance to its substance and management software. In fact, all the screened-in proponents have proposed partnerships with top local and overseas arts and cultural organisations, which is no doubt of benefit to the public, especially the arts and cultural sector.

We received five development proposals by the deadline of June 19 this year and briefed the Legco Panel on Planning, Lands and Works on the progress in June this year. The assessment committee has since then been assessing these five proposals and has now finished stage one of the assessment process.

So I will now inform Members of the screening result in this stage and the arrangements for the ensuing assessment and public consultation.

The five proposals received were from World City Culture Park Limited, Sunny Development Limited, Swire Properties Limited, Dynamic Star International Limited and Mr Lam, Sze-tat.

The first stage of the assessment involved screening the proposals against the basic requirements laid down in the IFP. An assessment committee of senior and experienced civil servants, including those from professional departments, carried out the screening based on the assessment criteria in the IFP. All officers involved had to observe the guidelines that were drawn up with the assistance of the Independent Commission Against Corruption (ICAC). We specifically invited the ICAC to witness the entire screening process to ensure that the process was fair and just.

The assessment committee has already presented its report to the Steering Committee which I chair. Subsequently, the Steering Committee recommended the screening result to the Chief Executive in Council and the result has been approved.

According to the screening result, the proposal from Swire Properties Limited does not meet the basic requirements specified by the IFP in several aspects. First, Swire Properties Limited fails to provide core arts and cultural facilities, such as a museum cluster, art exhibition centre and theatre complex, in the WKCD in accordance with the IFP. The proponent proposes to use the WKCD site principally for residential and commercial developments. This is not the Government's intention and is not acceptable.

World-class arts facilities, such as London's South Bank and West End, succeed in creating a cost-effective and vibrant hub by bringing together arts, cultural, entertainment and leisure facilities. In building the WKCD, the Government hopes to create a world-class cultural district that fosters artistic talent and attracts visitors.

Moreover, the proposal from Swire Properties provides no canopy in accordance with the basic requirements laid down in the IFP. It just proposes planting trees on the roofs of some low-rise connected retail buildings in the WKCD to provide a "living roof". This is materially different from the special features and concept of the design of the canopy required by the IFP. It would not create a unique architectural landmark for the WKCD to attract visitors. It would not group together the facilities in the district. It would not allow the public to enjoy the facilities in an open setting. The merits expected of the canopy design are lost.

In addition, Swire Properties scatters the required arts and cultural facilities in Tsim Sha Tsui, Tamar and Fenwick Piers, which will not create the clustering effect envisaged by the original design and will occupy several valuable public sites at the harbour front. It would also involve the demolition of some of the existing arts and cultural facilities in Hong Kong, including the Space Museum and the Museum of Art in Tsim Sha Tsui. These facilities now operate well with very high utilisation rates. Their demolition would, in addition to being a waste of public money, cause inconvenience to the public.

For the above reasons, we consider that the proposal submitted by Swire Properties Limited does not meet the basic requirements laid down in the IFP. In fact, Swire Properties has not declared that its proposal met all the basic requirements as stated in the IFP.

The proposal submitted by Mr Lam, Sze-tat does not meet the basic requirements since it does not show that the proponent possesses the required relevant direct experience for the project. It also fails to propose the core arts and cultural facilities.

The Government is grateful to Swire Properties Limited and Mr Lam, Sze-tat for the submission of their proposals. However, according to the rules set out in the IFP, the Government will not consider these proposals further.

The next steps

I wish to point out that the Government has just completed the first stage of the assessment process. The proposals that meet the basic requirements will be further assessed. This does not mean that the Government has formed any opinion on these proposals. We now need to proceed to the next stage of the assessment process, in which the assessment committee will continue to assess these proposals in accordance with the criteria set out in the IFP. The assessment covers three aspects, namely, technical, financial, and operation, maintenance and management. The ICAC will continue to witness the entire assessment process as an observer.

At the same time, the Government will consult the public on these screened-in proposals.

The Government announced in March this year that it planned to start public consultations early next year. Public can air their views on proposals that meet the basic requirements. These views will serve as reference in the selection and negotiation of proposals.

As the assessment process has been smooth, the Government will bring forward the public consultation exercise to mid-December to allow the community to become involved in this important and meaningful project earlier. We will invite the three screened-in proponents to take part in the public consultations. They will provide exhibits for public comment, including models made to scale and the contents of their proposals. This public exhibition will take place at the Hong Kong Science Museum and will last about six weeks. At the exhibition venue, the Government will distribute questionnaires to collect visitors' views on the screened-in proposals.

To let more people learn about the screened-in proposals, the Government will also display a summary of these proposals at places where people converge, including five venues under the Leisure and Cultural Services Department. All information displayed will also be uploaded onto the WKCD website. The public will then be able to browse the information on the internet and fill out an online questionnaire to express their opinions on the proposals.

I call on the public to visit the exhibition and to complete the questionnaire. Public views are valuable and will help the Government select the proposal that is in the best interests of the public. Those unable to go to the exhibition hall or unable to hand in the questionnaire at the exhibition venue are welcome to present their views to the Government through the post, email, etc.

In addition to the exhibition, the Government will also hold a series of discussion forums in various districts to collect views from various sectors of the community. We will invite representatives of each proponent to attend these forums to explain the contents of their proposals. This will provide a good opportunity for the public, cultural sector and relevant professionals to get to know the proposals and to give their views.

To ensure the information to be exhibited by the screened-in proponents is in line with the proposals submitted to the Government, proponents participating in the exhibitions will be required to submit such information to the Government in advance. They will also be required to sign an undertaking, promising that all the information provided in the exhibition, displays and discussion forums held by the Government truly reflects their proposals submitted earlier. The rules to be followed by these proponents will be uploaded onto the WKCD website later. Following the public consultation, we will publicise all the public views received to ensure a high level of transparency throughout the process.

Consultation with Legco

The Government will, of course, consult Legco on the proposals. We welcome Members to visit the exhibition and displays to see the contents of the screened-in proposals. We will be pleased to make arrangements for visits by Members. We also plan to arrange for the proponents to brief the relevant Legco panels on their proposals.

Making good use of public views

I would like to point out that the valuable views of the public and the Members are crucial to our further assessment of the proposals. All views collected will be taken into account before we decide on which proponents to negotiate with for improvements of their proposals. At the final stage of the assessment, we will consult the Legco and the Town Planning Board before signing the provisional agreement with the successful proponent. Development parameters such as plot ratio, gross floor area and maximum building height set out in the provisional agreement will be submitted to the Town Planning Board for inclusion in the South West Kowloon Outline Zoning Plan and approval under regular statutory procedures. After Town Planning Board has approved the zoning plan and the selected proponent has successfully performed its obligations under the provisional agreements, which include the preparation of the detailed masterplan, the Government will conclude the project agreement with the successful proponent.

Conclusion

The core development concept of the WKCD is that it is "people-oriented". We hope to select from the screened-in proposals one that is in the best interests of the public to develop world-class arts and cultural facilities and provide arts and cultural programmes of high standard to the public. By integrating the cultural and leisure facilities, the WKCD will bring economic benefits to Hong Kong and enhance its status as a world city and tourist destination.

I sincerely hope that the community will actively participate in this public consultation exercise. Your views are important in shaping the WKCD. I also look forward to Members' continued support. Let's create a vibrant artistic and cultural environment for the people of Hong Kong and our future generations.

Thank you, President.

6. Transcript of press conference on development of West Kowloon Cultural District
Hong Kong Government, 10 November 2004

Following is the transcript (English portion) of a press conference by the Chief Secretary for Administration, Mr Donald Tsang, on the development of West Kowloon Cultural District at the Central Government Offices this afternoon (November 10):

Reporter: I was just wondering how big a role will the public consultation process play in the selection process?

Chief Secretary: It will be a very significant role. We will listen very carefully. We will look at and examine all the questionnaires received. This will be very influential in the final selection process. It will definitely influence our negotiations with the prospective developers to ensure the public views are fully reflected in the process. And the final decision will be made known to the public and they will be able to see to what extent their views were taken into account in the final choice.

Reporter: How is the Government going to ensure that the cultural hub won't be transformed into a commercial district or that it won't be too commercialised?

Chief Secretary: One of the critical elements in our assessment is the way in which the developers would want the facilities to be run. And this in fact is a third of the total assessment process. We are going to ensure that these provisions will be adequate to protect the integrity of those cultural facilities to ensure the sustainability of these facilities over a period of at least 30 years and to make sure they produce high-quality programmes during the course of the 30 years. This will be part and parcel of the assessment process.

7. Public consultation on WKCD development proposals to launch in mid-December
Hong Kong Government, 10 November 2004

The Government announced today (November 10) the result of the first stage of assessment for the West Kowloon Cultural District (WKCD) development project. The public consultation exercise on the screened-in proposals will be launched in mid-December, 2004. Views collected from the community will be fully taken into account in the Government's negotiations with the proponents and selection of the preferred proposal.

At the Legislative Council meeting and the subsequent press conference this afternoon, the Chief Secretary for Administration, Mr Donald Tsang, stressed that the WKCD project was aimed at developing a world-class cultural district, offering an abundance of arts, cultural and entertainment programmes for the public.

"At the same time, we also hope to create a unique icon design for the WKCD with a chain of arts and cultural facilities to attract visitors and bring people together to achieve cost-effectiveness," Mr Tsang said.

"We believe that the two goals are complementary. A unique architectural, arts and cultural icon can more easily attract the participation of private enterprises together with renowned and experienced local and overseas arts and cultural bodies, and provide quality arts and cultural programmes for the public."

Mr Tsang noted that the WKCD project had attracted enterprises and consortiums of different sizes. All the screened-in proponents had proposed partnerships with top local and overseas arts and cultural organisations, which was evidence of the project's attractiveness and the great importance placed on the substance and management "software" as well as the "hardware".

"The entire assessment process is conducted in a fair and just manner. An assessment committee of senior and experienced civil servants, including those from professional departments, carried out the screening based on the stated assessment criteria. The Independent Commission Against Corruption has also witnessed the entire screening process to ensure the assessment team followed the stated criteria during the assessment."

"The assessment committee presented its report to the Steering Committee which I chair. Subsequently, the Chief Executive in Council approved the screening result," Mr Tsang said.

Among the five proposals received by the Government, three have complied with the requirements. They are World City Culture Park Limited, Sunny Development Limited and Dynamic Star International Limited.

The remaining two proposals submitted by Swire Properties Limited and Mr Lam Sze-tat failed to comply with the requirements.

Mr Tsang explained why the two had been screened out. "First, Swire Properties Limited fails to provide core arts and cultural facilities, such as a museum cluster, art exhibition centre and theatre complex, in the WKCD in accordance with the Invitation for Proposals (IFP). The proponent proposes to use the WKCD site principally for residential and commercial developments. This is not the Government's intention and is not acceptable.

"Moreover, the proposal from Swire Properties provides no canopy in accordance with the basic requirements laid down in the IFP. It just proposes planting trees on the roofs of some low-rise connected retail buildings in the WKCD to provide a 'living roof'. This is materially different from the special features and concept of the design of the canopy required by the IFP, and the merits expected of the canopy design are lost.

"In addition, Swire Properties scatters the required arts and cultural facilities in Tsim Sha Tsui, Tamar and Fenwick Piers, which will not create the clustering effect envisaged by the original design and will occupy several valuable public sites at the harbour front. It would also involve the demolition of some of the existing arts and cultural facilities in Hong Kong. These facilities now operate well with very high utilisation rates. Their demolition would, in addition to being a waste of public resources, cause inconvenience to the public."

As to the proposal submitted by Mr Lam Sze-tat, Mr Tsang pointed out that it failed to meet the basic requirements since it did not show that the proponent possessed the required relevant direct experience for the project. It also failed to propose the core arts and cultural facilities.

He added that the screening-in of three proposals did not mean that the Government had formed any opinion on them.

"It only means that they, at this stage, complied with the basic requirements laid down for this project by the Government. We still have to further assess these proposals in accordance with the criteria already set out, namely, technical and financial aspects, and operation of arts and cultural facilities.

"At the same time, the Government will consult the public on the three screened-in proposals," Mr Tsang said.

The Government will invite all screened-in proponents to take part in the public consultations. They will provide exhibits for public comment, including models made to scale and descriptions of the contents of their proposals. This public exhibition will take place at the Hong Kong Science Museum and will last about six weeks.

At the exhibition venue, the Government will distribute questionnaires to collect visitors' views on the screened-in proposals.

To let more people learn about and express views on the screened-in proposals, the Government will also display a summary of these proposals at places where people converge, including five venues under the Leisure and Cultural Services Department. All information displayed will also be uploaded onto the WKCD website.

In addition, the Government will hold a series of discussion forums in various districts, and will invite representatives of each proponent to attend these forums to explain the contents of their proposals to the public directly.

"We attach great importance to the participation and opinions of the community. In order to make perfect this future architectural, arts and cultural icon representing Hong Kong and its facilities, the Government will carefully take the public's views into account before selecting proposals as well as negotiating with the proponents for improvements of their proposals," Mr Tsang said.

He added that the Government would publicise all the public views received, and would consult the Legislative Council and the Town Planning Board at an appropriate time before signing the provisional agreement with the proponent.

On September 5, 2003, the Government issued an invitation to the private sector worldwide to submit proposals for the development and operation of these world-class facilities -- to develop the 40-hectare waterfront site at the southern tip of West Kowloon into an integrated arts, cultural and entertainment district. By the June 19, 2004 deadline, the Government had received five proposals.

Construction on the site is expected to begin in April 2007 at the earliest and that the core arts and cultural facilities will come into operation in phases from 2011.

8. Pollution caps planned
Colum Murphy, SCMP 10 November 2004

Stepping up the fight against Hong Kong's worsening air pollution, the government announced that it will take steps to limit emissions from power plants, a move that left industry sources in the dark, saying they were not aware of the details.

``We are going to impose emission caps on power companies, '' Secretary for the Environment, Transport and Works Sarah Liao said.

Emission caps would limit the total amount of pollution that a single company or power plant is allowed to emit.

Existing requirements only deal with capping concentrations of specific pollutants.

Existing regulatory tools allow for curbing pollutants generated by power plants, Liao said, implying that new legislation will not be needed to enforce the caps. She said under the Air Quality Ordinance, the director of the Environmental Protection Department had the power to enforce such caps.

Green groups have long pressured the government to take stronger action to do something about the pollution problem.

Richard Lancaster, commercial director for CLP Power, said that talk of emission caps was not new but that his company was not aware of the details of Liao's proposal. ``We don't know the level of the cap and when it is taking place,'' Lancaster said.

Liao said licence agreements between the government and the power companies was another way to introduce emission caps.

Such caps are not currently part of the licence agreement between the government and the two power suppliers, CLP Power and Hong Kong Electric.

The Scheme of Control agreements are due to expire in 2008.

Under the agreements, which are primarily commercial in nature, the government fixes the return power companies in Hong Kong can make on their capital spending on fixed assets at 13.5 per cent.

Liao implied that in future the government wanted to incorporate emission caps into the scheme of control agreements, as well.

``We're negotiating still,'' Liao said, ``but you know the scheme of control is a tough nut to crack.''

Later, Tse Chin-wan, principal assistant secretary at the environment branch of the Environment, Transport and Works Bureau, played down the issue, saying emission caps have been on the agenda since the 2002 Hong Kong and Guangdong governments' joint study on pollution. After the study, the two sides agreed to reduce emissions in the Pearl River Delta significantly by 2010.

CLP Power has already outlined emission reduction steps in the financial plan it submitted to the Economic Development and Labour Bureau in June this year as part of the Schemes of Control Agreement discussions, Lancaster said.

These included plans to install emission reduction equipment at its Castle Peak plant, as well as expanding use of more environmentally friendly liquified natural gas in power production.

However, Lancaster said that the effect of such measures would not kick in overnight.

``We're looking at long lead times,'' he said, adding that the early part of the next decade was a realistic target, and that technical and practical details would need to be considered.

``The earlier we reach agreement on emission caps [with the government], the earlier we can finalise our plans,'' he added.

On the issue of emission caps being introduced under the auspices of a regulatory body such as the Environmental Protection Department (EPD), Lancaster urged the government to consider both broad, bureau-level policy implications as well as implementation considerations at the department level.

``The two must go hand in hand,'' he said, adding there should be an element of practicality involved.

Two-thirds of Hong Kong's electricity is generated by traditional power plants in the territory with one-third coming from the Daya Bay nuclear plant in Guangdong.

According to data collected by the EPD, Hong Kong power plants account for 89 per cent, 45 per cent and 37 per cent of the total emissions of sulphur dioxide, nitrogen oxides and respiratory suspended particulates respectively.

It is estimated that if natural gas is used in the production of electricity instead of coal, consumers would have to bear a 10 per cent increase in electricity costs.