PWSC(97-98)70
For discussion
on 12 November 1997

ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 702 - PORT AND AIRPORT DEVELOPMENT
Air and Sea Communications - Port Works
108AP - Northshore Lantau Port development feasibility study
and site investigation

Members are invited to recommend to Finance Committee the upgrading of 108AP, retitled "Northshore Lantau development feasibility study and site investigation", to Category A at an estimated cost of $62.8 million in money-of-the-day prices.

PROBLEM

We need to determine the feasibility of the proposed Northshore Lantau development.

PROPOSAL

2.The Director of Civil Engineering, with the support of the Secretary for Economic Services and the Secretary for Planning, Environment and Lands, proposes to upgrade 108AP to Category A at an estimated cost of $62.8 million in money-of-the-day (MOD) prices, to engage consultants to conduct a feasibility study of the port facilities and other land uses proposed for Northshore Lantau.

PROJECT SCOPE AND NATURE

3.Northshore Lantau development includes the reclamation of approximately 400 hectares of sea-bed along the north shore of Lantau Island between Kwai Shek and Tai Ho Wan. The extent of reclamation is subject to the findings of the proposed feasibility study and site investigation. Apart from reviewing port facilities including a river trade terminal, floating dock on-shore facilities, a mid-stream site, and a public cargo working area, the proposed feasibility study will examine the opportunities to accommodate non-port facilities such as a business estate, a science park, environmentally clean high technology industries, and land extensive government/institution/community uses such as an Olympic training centre and a sports stadium on the reclamation area. It will also investigate the scope for low density housing, resort hotels and other tourist/recreation development at the Tsing Chau Tsai headland north of Penny's Bay.

4.The project scope comprises -

1. review of the proposed land uses and transport infrastructure in the study area including the future Penny's Bay reclamation currently planned to support the development of Container Terminals 10 and 11;

2. assessment of planning, engineering, traffic and transport, environment, marine and drainage aspects of the proposed development, and the preparation of an outline development plan for the study area;

3. preparation of implementation plans, programmes, cost estimates and drawings;

4. environmental impact assessments for both construction and operation phases of the development; and

5. environmental and ecological surveys, site investigations and testing.

JUSTIFICATION

5.The growing river trade traffic reflects the continued shift towards using the Pearl River waterways for the transportation of containers and cargoes between Hong Kong and Guangdong. The use of river barges to transport containers and cargoes is not only cheaper but it also helps to reduce pressure on the road system and border crossings. To encourage more use of the waterways for transporting containers, the first Tuen Mun River Trade Terminal (RTT) will come into operation in 1998. To meet the longer term demand, we have identified a site at Northshore Lantau for the development of a second RTT and we need to start the feasibility study to confirm the suitability of the site.

6.Mid-stream operations refer to the loading and unloading of containers by barges from vessels, mainly intra-Asia, moored in the harbour. Currently mid-stream operators handle about 3 million TEUs (twenty foot equivalent units) or 23% of the throughput of our port. Due to the scarcity of land for conventional container terminal development in Hong Kong, mid-stream operations will continue to play a vital role in meeting the shortfall in container handling capacity.

7.At present, the majority of the mid-stream sites are under short-term tenancy and reserved for other long-term developments. The study on mid-stream operations carried out by the Planning Department in 1996 indicated that permanent mid-stream sites with purpose-designed back-up and marshalling facilities are essential to improve the efficiency and productivity of mid-stream operations. We have reserved land in Northshore Lantau to provide permanent mid-stream sites to meet the long-term demand and we need to carry out a feasibility study to confirm the suitability of the site.

8.According to the Territorial Development Strategy Review in 1996, Northshore Lantau is a possible long-term major employment centre which would improve the regional job imbalance and relieve pressure in the congested developed areas in other parts of Hong Kong. It is a potential area for development of an industrial estate, a science park and a business estate. On the other hand the Visitor and Tourism Study for Hong Kong published in 1996 has highlighted the recreational potential of Northshore Lantau. It proposes the development of a gateway park in the area which, together with other tourism attractions such as the Observation and Exhibition Centre, Urban Fringe Park and Theme Park proposed in the Tsing Yi and Ma Wan area, would form a new tourism node. It also proposes new hotels to enhance the tourism potential of this new node.

9.With the completion of the transport infrastructure to the new airport at Chek Lap Kok and the North Lantau New Town, Northshore Lantau will be well served by major road and rail links. To capitalize the development opportunities arisen, we consider it necessary to undertake the proposed study to examine the alternative land use options together with the port facilities as described in paragraphs 5 to 8 above.

10.Sites have already been reserved in the proposed Penny's Bay reclamation area for industrial and business estates, which may be better located within the Northshore Lantau Development area. There is also the need to finalize the alignment of the future Lantau Port Expressway through Penny's Bay, linking the proposed Sham Tseng link to North Lantau Expressway at Yam O Interchange, and to incorporate this into the land use proposals for Penny's Bay. The proposed feasibility study will review the land use and transport infrastructure proposals in Penny's Bay in conjunction with Northshore Lantau, so as to arrive at a balanced development plan for the entire study area.

FINANCIAL IMPLICATIONS

11.We estimate the total cost of the project to be $62.8 million in MOD prices, made up as follows -

			$ million
(a)	consultants' fees :		29.2
	(i)land use and transport infrastructure review and planning studies	10.4
	(ii) engineering, traffic and transport, marine and drainage studies	9.8
	(iii) preparation of implementation plans, programmes and estimates	0.9
	(iv) environmental impact assessment (EIA)	6.9
	(v) planning and supervision of surveys, site investigation and tests and interpretation of results	1.2
(b)	site investigations and testing, and environmental and ecological surveys		17.2
	(i) site investigations	11.8
	(ii) testing of soil samples	1.1
	(iii) environmental survey	2.5
	(iv) ecological survey	1.8
(c)	contingencies		4.6
Sub-total			51.0	(at December 1996 prices)
(d)	Inflation allowance		11.8
Total			62.8	(in MOD prices)

12.A breakdown by man-months of the estimate for consultants' fees for 11(a) above is at Enclosure 1.

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

Year	$ million (Dec 96)	Price adjustment factor	$ million (MOD)
1998 -1999	22.9	1.16358	26.6
1999 - 2000	22.9	1.26830	29.0
2000 - 2001	5.2	1.38244	7.2
	51.0		62.8

14.We have derived the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices for the period 1998 to 2001.

15.We will award the consultancy assignment on a lump sum fee basis with provision for inflation adjustment. This is the standard form of agreement for services of this type. The site investigation works will be carried out under a remeasurement contract because of the uncertain quantity of the work. The contract will provide for inflation adjustment if the current Geotechnical Engineering Office term contract is used. If, however, a separate contract is arranged, it will not provide for inflation adjustment as the contract period will not exceed 21 months.

16.This project will not give rise to any recurrent expenditure.

PUBLIC CONSULTATION

17.We consulted the Islands and Tsuen Wan District Boards at various stages during the Lantau Port feasibility studies and the subsequent planning and design of the Lantau Port Development project. The most recent consultations took place on 27 February 1995 and 7 March 1995 with the Islands and Tsuen Wan District Boards respectively. The District Boards had no comments on the proposed development on the north shore. We will brief the District Boards on the results of this study regarding the port developments and the other land use proposals.

18.We gazetted the draft North-east Lantau Port Outline Zoning Plan (OZP) on 24 March 1995 which included a river trade terminal and floating dock on-shore facilities near Kwai Shek. Friends of the Earth and World Wide Fund for Nature Hong Kong objected to this use on the basis that a more detailed EIA should be conducted. We advised them that we had carried out a comprehensive EIA which showed that the potential environmental impacts arising from the construction and operation of the facility could be contained within acceptable environmental limits. The OZP was approved on 24 September 1996 and gazetted on 4 October 1996. However, in view of the other port facilities now proposed as well as the additional non-port land use proposals, we will conduct an EIA as part of the proposed study to confirm the acceptability of all the uses. Subject to the results of this study, we will amend the OZP to incorporate the revised land use proposals and gazette it for public inspection under the Town Planning Ordinance.

ENVIRONMENTAL IMPLICATIONS

19.The site investigation and the study itself will not have any environmental impacts.

20.We will conduct a preliminary environmental assessment on various development options to evaluate and confirm the feasibility of the revised extent of reclamation and scope of development, and recommend a preferred outline development plan for the proposed project. Based on the preferred development plan, we will then carry out a detailed EIA study to confirm the environmental acceptability and to identify any necessary mitigation measures.

LAND ACQUISITION

21.The proposed feasibility study, site investigations and environmental and ecological surveys will not require any resumption of land.

BACKGROUND INFORMATION

22.We plan to start the study by early 1998 for completion in late 1999.

LOCATION PLAN

23.We attach a sketch at Enclosure 2 showing the study area.

Economic Services Bureau
November 1997

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Enclosure 1 to PWSC(97-98)70

108AP - Northshore Lantau development feasibility study and site investigation

Breakdown of estimates for consultants' fees

Notes

1.A multiplier factor of 3 is applied to the average MPS point to arrive at the full staff costs including the consultants' overheads and profit, as the staff will be employed in the consultant's offices. (At 1.4.96, MPS pt. 40 = $55,390 p.m. and MPS pt. 16 = $18,595 p.m.).

2.The figures given above are based on estimates prepared by the Director of Civil Engineering. We will only know the actual man months and actual fee when we have selected the consultant through the usual competitive lump sum fee bid system.