PLC Panel on Planning, Lands and Works

STRATEGIC SEWAGE DISPOSAL SCHEME STAGE I

Purpose

This paper informs Members of the progress on the Strategic Sewage Disposal Scheme (SSDS) Stage I works and the way forward.

Background

2. The Sewage Services Trading Fund (SSTF) was established on 11 March 1994 by resolution of the previous Legislative Council under the Trading Funds Ordinance. To finance the design and construction of the High Priority Programme (HPP) Government injected $6.8 billion into the SSTF as trading fund capital. The Fund is responsible for the provision of all the services specified in the said resolution.

3. The HPP comprises Stage I of the Strategic Sewage Disposal Scheme and the six Sewerage Master Plans (SMPs) around the Victoria Harbour connected with it. Under the SSDS Stage I, six deep underground tunnels totalling about 24 km long are to be constructed to convey waste water from the existing sewage screening plants in the six sewage catchments around the harbour to Stonecutters Island. At the Stonecutters Island Sewage Treatment Works the waste water will undergo a chemically enhanced primary treatment process prior to discharge to the sea through an interim submarine outfall.

4. In July 1994, the SSTF Works Committee approved the contract titled "Strategic Sewage Disposal Scheme Stage I: Sewer tunnel system from Chai Wan and Tseung Kwan O to Kwun Tong" for the construction of two sewage tunnels from Chai Wan and Tseung Kwan O to Kwun Tong (Tunnels BA and C). The approved project estimate was $558 million at MOD prices.

5. In December 1994, the Works Committee further approved the contract "Strategic Sewage Disposal Scheme Stage I: Sewer tunnel system from Kwun Tong and Kwai Chung to Stonecutters Island" for the construction of four sewage tunnels from Kwun Tong and Kwai Chung to Stonecutters Island (Tunnels D, E, F and G). The approved project estimate was $750 million at MOD prices.

Contractual Disputes

6. We awarded both contracts at a total sum of $1.3 billion to a contractor in 1994. Works commenced in January 1995 and were scheduled for completion in May 1997. However, progress of the works deteriorated significantly from early 1996 onwards. In June 1996, the contractor unilaterally suspended work in the tunnel sections from Tseung Kwan O to Kwun Tong (Tunnel C) and from Tsing Yi to Stonecutters Island (Tunnel F). Work in the other four tunnels also ceased in July 1996.

7. The Director of Drainage Services held a number of meetings with the contractor's senior management and tried to persuade the contractor to resume work without success. In view of the contractor's failure to proceed with the works with due diligence as required under the contract despite warnings, we re-entered the sites on 4 December 1996. We subsequently engaged separate contractors to provide maintenance and security services for the existing tunnel sites pending re-tendering of the outstanding works. The six tunnel projects were re-grouped into three completion contracts for re-tendering.

The Western Sewage Tunnel System

8. We invited tenders to complete the two western tunnels from Kwai Chung to Tsing Yi and from Tsing Yi to Stonecutters Island in February 1997. The contract was awarded in July 1997 at a contract price of $357 million. Funds are available under the SSTF to cover the cost. The contractor is currently carrying out site preparatory work and is refurbishing the tunnel boring machine. Excavating work is expected to start in November 1997. Independent tunnel experts will be retained to assist in assessing the method statement submitted by the contractor and resolving any problems which might arise during construction.

9. The Stonecutters Island Sewage Treatment Works, a major project under the SSDS Stage I, was commissioned in May 1997. It currently operates at 25% of its designed capacity to treat sewage from the North West Kowloon areas through an existing sewerage system. Its utilisation rate will increase to 50% after completion of the two western tunnels in August 1999. However, we will only be able to fully utilise its maximum capacity and achieve the objective of the High Priority Programme to reduce the flow of pollutants into the Victoria Harbour by 70% in early 2000 upon completion of the eastern tunnel system.

The Eastern Sewage Tunnels System

10. This comprises four sewage tunnels from Chai Wan to Kwun Tong (Tunnel BA), from Tseung Kwan O to Kwun Tong (Tunnel C), from Kwun Tong to To Kwa Wan (Tunnel D) and from To Kwa Wan to Stonecutters Island (Tunnel E). They represent about 82% of the total length of sewage tunnels under the SSDS Stage I. These sewage tunnels will convey sewage from the catchment covering Chai Wan, Shau Kei Wan, Tseung Kwan O, Kwun Tong and To Kwa Wan to Stonecutters Island for treatment.

11. We have completed the detailed design for the outstanding works of the eastern sewage tunnels. We invited tenders in June 1997 and tender submission will be closed in early October. We plan to commence the completion works in December 1997 for completion in early 2000. The estimated project cost is $2,000 million at MOD prices.

12. We estimate that funds available under the SSTF capital account will not be sufficient to cover the project cost for completing the four eastern sewage tunnels. The increase in the revised project estimate over the original project cost is mainly due to inflation, the need to re-mobilise resources and re-provisioning of tunnel boring machines.

The Way Forward

13. As we forecast that the SSTF will have an operating deficit in the coming years and there is no prospect of a turn-around in the foreseeable future, we plan to close it on 31 March 1998. Since the works under this project will last beyond the closing of the SSTF, we shall seek funds under the Capital Works Reserve Fund to complete the eastern tunnel system. We shall make an application to the PWSC in October/November for allocation of $2,000 million to cover the cost of the remaining works in the Eastern Sewage Tunnels System.

14. We intend to pursue a claim for losses arising from re-entry of the two tunnel contracts including the additional costs for completing the tunnelling works. We will ascertain these losses after completion of the tunnelling works.

WORKS BUREAU
24 September 1997