For discussion PWSC(95-96)98
on 7 February 1996

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT
New Territories East Development
(Water Supplies - Combined fresh/salt water supply projects)
37WC - Water supply to Tseung Kwan O

Members are invited to recommend to Finance Committee -

1. the upgrading of part of 37WC to Category A, entitled “Water supply to Tseung Kwan O - stage IV phase I”, at an estimated cost of $129.2 million in money-of-the-day prices; and
2. the retention of the remainder of 37WC in Category B.

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PROBLEM
PROPOSAL
PROJECT SCOPE AND NATURE
JUSTIFICATION
FINANCIAL IMPLICATIONS
PUBLIC CONSULTATION
ENVIRONMENTAL IMPLICATIONS
LAND ACQUISITION
BACKGROUND INFORMATION

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PROBLEM

The existing water supply system serving Tseung Kwan O New Town will not be able to cope with the anticipated increase in water demand generated by the development of the town up to 2001.

PROPOSAL

2. The Director of Territory Development (DTD), with the agreement of the Director of Water Supplies (DWS) and the support of the Secretary for Works, proposes to upgrade part of 37WC to Category A at an estimated cost of $129.2 million in money-of-the-day (MOD) prices for the site formation works for the Tiu Keng Leng fresh water service reservoir and the mainlaying work in Tiu Keng Leng and Tai Chik Sha.

PROJECT SCOPE AND NATURE

3. The full scope of 37WC comprises -

1. construction of the Tiu Keng Leng fresh water service reservoir with a capacity of 37 000 cubic metres;
2. laying of fresh water trunk/distribution mains of about 9 800 metres in total length with sizes ranging from 200 to 1 200 millimetres in diameter in Tseung Kwan O Town Centre, Tiu Keng Leng and Tai Chik Sha; and
3. laying of salt water distribution mains of about 8 500 500 metres in total length with sizes ranging from 200 to 600 millimetres in diameter in Tseung Kwan O Town Centre, Tiu Keng Leng and Tai Chik Sha.

4. The part of the project we now propose to upgrade to Category A comprises -

1. site formation for the Tiu Keng Leng fresh water service reservoir;
2. laying of about 3 900 metres long fresh water trunk/distribution mains abovein Tiu Keng Leng and Tai Chik Sha; and
3. laying of about 3 300 metres long salt water distribution mains in Tiu Keng Leng and Tai Chik Sha.

JUSTIFICATION

5. In pace with the development of the new town, DWS is expanding in stages the fresh and salt water supply system to serve Tseung Kwan O. After completion of the current stage of expansion under 68WC “Water supply to Tseung Kwan O - stage III”, the water supply system in Tseung Kwan O can cope with a fresh and salt water demand of 96 800 and 45 000 cubic metres per day respectively. Given the planned developments in Tseung Kwan O, we anticipate that the fresh and salt water demand will increase from the current respective levels of 36 300 and 10 600 cubic metres per day to 96 800 and 29 000 cubic metres per day by 2001, and to 152 300 and 45 000 cubic metres per day when the new town is fully developed¹. The works now proposed under stage IV phase I form part of an expanded system required to increase the capacity of the fresh water supply system to 152 300 cubic metres per day and to extend the fresh and salt water distribution mains to the new development areas.

6. The Director of Housing (D of H) plans to commence the site formation work and roadworks for the housing development of Tiu Keng Leng in September 1996. As the site of the proposed Tiu Keng Leng fresh water service reservoir falls within the boundary of D of H’s site formation work, and about 5 000 metres of the proposed water mains in Tiu Keng Leng will be laid under the roads to be constructed by D of H, we consider it economical and desirable to incorporate the site formation work for the service reservoir, and the mainlaying work in Tiu Keng Leng, into the works contracts for the Tiu Keng Leng housing development. D of H has agreed to undertake the site formation and mainlaying works, and to hand over the formed site to DWS for the construction of the fresh water service reservoir in January 1999.

7. The remaining part of the works now proposed, the laying of about 2 200 metres of water mains in Tai Chik Sha, falls within the project boundaries of 324CL “Tseung Kwan O development phase III, remaining engineering works”. As the works contract under 324CL, to be administered by the Director of Civil Engineering (DCE), will commence in January 1997, we intend to incorporate the remaining mainlaying work into the works contract. DCE agrees to this arrangement.

8. In order to meet the future water demand of Tseung Kwan O, and to enable timely incorporation of the works into the works contracts of D of H and DCE, we need to upgrade part of the works under 37WC to Category A.

9. For the housing development at Tiu Keng Leng, Tseung Kwan O, the Housing Authority(HA) has reached an agreement with the Government to fund the relevant part of site formation and associated infrastructural costs in order to accelerate the works to meet its housing production target. Please refer to paragraph 10 for detailed distribution of costs between the HA and the Government for the proposed works under 37WC.

FINANCIAL IMPLICATIONS

10. We estimate the capital cost of the stage IV phase I works to be $177.5 million in MOD prices. In accordance with the water demand arising from the housing development in the new town, the Housing Authority (HA) will bear $48.3 million of the project cost leaving the remainder of $129.2 million to be borne by the Government under 37WC (see paragraph 11 below), made up as follows -

11. Subject to approval, we will phase expenditure as follows -

12. We derive the MOD estimate on the basis of the Government’s forecasts of trend labour and construction prices over the period between 1996 and 2002. We will invite tenders for the supply of pipe materials on a fixed-price lump-sum basis, which is normal for procurement contracts. We will tender the site formation and mainlaying works under standard re-measurement contracts because of uncertain ground conditions which may result in local design changes on site and hence variations in the quantities of works. We will also provide for inflation adjustment in the contract because the construction period will last longer than 21 months.

13. We estimate the annually recurrent expenditure for the water mains to be $574,500.

PUBLIC CONSULTATION

14. We consulted the Sai Kung District Board on this project in December 1994 and March 1995. The District Board had no objection to the project.

ENVIRONMENTAL IMPLICATIONS

15. The Director of Environmental Protection completed an environmental review in August 1993 and concluded that the project would not have a long term environmental impact and no environmental impact assessment would be necessary. We will control noise, dust and site run-off during construction to within established standards/guidelines by incorporating standard environmental pollution control clauses in the relevant works contracts.

LAND ACQUISITION

16. The project forms part of the Tseung Kwan O phase III New Town development which requires the clearance of Tiu Keng Leng cottage area of about 1 700 cottages involving 6 000 people. D of H will provide these people with accommodation in public housing or temporary housing in line with the existing policies. In addition to rehousing, Finance Committee approved in March 1995 the payment of special ex-gratia allowances for the clearance of the cottage area amounting to $972.06 million. We will charge the ex-gratia allowance to Head 701 - Land Acquisition. D of H will complete the clearance in phases from April 1996 to July 1996 at an estimated cost of $23.4 million. The clearance cost will be borne by the Housing Authority.

BACKGROUND INFORMATION

17. We included 37WC in Category B in 1978 to provide a water supply system in stages for a designed population of 445 000 and industrial land of 230 hectares in Tseung Kwan O New Town. We have since part upgraded 37WC to complete stage I and stage II of the project under 27WC “Water supply to Tseung Kwan O, stage I” and 45WC “Water supply to Tseung Kwan O, stage II”. In January 1994, we part upgraded 37WC to Category A as 68WC “Water supply to Tseung Kwan O - stage III” to implement the third stage of the water supply system.

18. As regards the proposed works under stage IV phase I, we have substantially completed the detailed design for the site formation work of the Tiu Keng Leng housing projects using D of H’s in-house staff resources, and the detailed design for the mainlaying works, using DWS’s in-house staff resources. We intend to invite tenders for the supply of pipe materials in March 1996. We plan to start the site formation and mainlaying works in Tiu Keng Leng in September 1996 for completion in December 1998 and August 2000 respectively, and to start the mainlaying work in Tai Chik Sha in January 1997 for completion in January 1999.

19. After upgrading the proposed works as indicated in paragraph 4 above to Category A, the remaining works under 37WC comprise the construction of the Tiu Keng Leng fresh water service reservoir and laying of the remaining fresh and salt water mains in Tseung Kwan O Town Centre and Tiu Keng Leng. We have scheduled the works to start in September 1997 for completion in December 2003.

1 -- We estimate that the population in Tseung Kwan O will increase from the present 137 300 to 295 000 by 2001. The designed population for the new town upon full development is 445 000.
2 -- The share to borne by HA is determined in accordance with the proportion of the fresh water and salt water demand arising from its housing development.

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