LegCo Panel on Transport

Progress of Tendering Out Outlying Island, New Town and Inner Harbour Ferry Services

Purpose
    This paper informs Members of -

  1. the tender results of the outlying island ferry services;

  2. the progress of tendering out the new town and inner harbour ferry services; and

  3. the legal requirements in respect of the determination of maximum fares for licensed services.
Background

2. The Hongkong and Yaumati Ferry Company Limited (HYF)'s current franchise will expire on 31 March 1999. On 15 September 1998, the Chief Executive in Council decided that HYF's present outlying island, inner harbour and new town services, together with the Central to Hung Hom service operated by the "Star" Ferry Company Limited, should be grouped into different packages and put to public tender as licensed services after the expiry of the current franchises on 31 March 1999.

3. Priority was given to the tendering of the outlying island services since these are essential services with no land transport alternatives.

Outlying Island Services

A. Number of Bids received

4. The outlying island routes were grouped into three packages as follows -

(a)Package I : Central to Cheung Chau, Kowloon Point to Cheung Chau (excursion) and Inter-Islands services;

(b) Package II : Central to Mui Wo, Central to Peng Chau and Kowloon Point to Mui Wo (excursion) services; and
(c) Package III : Central to Yung Shue Wan and So Kwu Wan services.


5. A gazette notice inviting tenders was published on 18 September 1998, with a tender closing date of 12 October 1998. Altogether ten bids from six companies were received: four for Package I and three each for Packages II and III.

B. Assessment Criteria

6. The objective of the tender exercise was, first and foremost, to maintain continuous provision of ferry services to the outlying islands after 31 March 1999. We also seek to improve the overall standard of ferry services through competitive tendering.

7. The tenders were assessed by an inter-departmental Tender Assessment Committee chaired by a Deputy Commissioner for Transport and comprising representatives from Transport Department, Marine Department, Home Affairs Department, Department of Justice and the Independent Commission Against Corruption. The Committee was supported by evaluation teams comprising experts from departments including Labour Department and Civil Engineering Department which assessed specific aspects of the tenders. The assessment was made on the basis of -
  1. the level of services to be provided;

  2. the fares to be charged;

  3. the quality of vessels and passenger facilities;

  4. the corporate and financial capability of the tenderers; and

  5. the proposed contingency arrangements.
C. Tender Results

8. The successful tenderers are -
  1. Package I - Hongkong and Yaumati Ferry Co. Ltd. (HYF)

  2. Package II - Hongkong and Yaumati Ferry Co. Ltd. (HYF)

  3. Package III - Hong Kong and Kowloon Ferry Ltd. (HKK)
9. The two successful tenderers have been granted licences to operate the outlying island ferry services for a period of three years from 1 April 1999 to 31 March 2002. The licences may be extended for a further period or periods of up to three years at any one time, with the aggregate continuous licence period not exceeding ten years.

10. Both HYF and HKK are experienced local ferry operators. Both have committed in their bids the provision of quality ferry services at reasonable fares for passengers. Based on the assessment criteria adopted, HYF scored the highest marks in overall terms for Packages I and II. The strength of its proposals included low fares, and improved service levels over the existing services in terms of the number of trips provided and the journey time required. HKK scored the highest marks in overall terms for Package III. The strength of its proposal included low fares and the deployment of newer and faster vessels which represented a welcomed improvement over the existing services. Background information on HYF and HKK, and the operation features of their bids are presented in Annex A and Annex B.

11. The Islands District Board was briefed by the two operators on 10 November 1998, and the views of the Board members will be taken into account in fine-tuning the service timetables.

12. Transition is expected to be smooth in April 1999, with HYF retaining most of its existing staff for Packages I and II. HKK will recruit HYF staff to fill all the posts required to operate Package III. The Administration will closely monitor the situation, and will provide all necessary assistance to ensure a smooth transition in operation.

Inner Harbour and New Town Services

13. Taking into account the commercial viability and geographical distribution, HYF's inner harbour and new town services and "Star" Ferry's Central to Hung Hom service have been grouped into the following five packages for a public tender -

(a) Package A : Central to Tuen Mun service, and an excursion service with calling points at Central, Tuen Mun, Sha Lo Wan and Tai O;
(b) Package B : Central to Tsim Sha Tsui (East) service;
(c) Package C : North Point to Kwun Tong service
(d) Package D : Service(s) with calling points at North Point, Hung Hom and Kowloon City; and
(e) Package E : Service(s) with calling points at Central, Wan Chai and Hung Hom.

14. Tenders were invited on 30 October 1998, with a tender closing date of 20 November 1998. Altogether eight bids from six companies were received. There is no bidder for Package C and the service would be ceased after 31 March 1999. Since the patronage of the service is low and there are convenient land transport alternatives, the discontinuation of the service would not have any significant impact on passengers and the land traffic. We will monitor the situation to see whether other public transport serving North Point to Kwun Tong would need to be strengthened.

15. The tenders received are being assessed by an inter-departmental Tender Assessment Committee, with its composition similar to that for the outlying island ferry services. Similar tender assessment criteria will also be adopted. The assessment is expected to be completed in December 1998 and the successful tenderers will be notified accordingly. The successful tenderers are also required to make a first offer to HYF staff to fill the relevant vacant posts available for operating the services.

Legal Procedures in respect of the Determination of Maximum Fares for Licensed Services

16. On 13 October 1998, the Legal Service Division of the Legislative Council Secretariat wrote to the Administration seeking views as to whether notices in the Gazette under section 33(1) of the Ferry Services Ordinance, Cap 104 ("the Ordinance") were subsidiary legislation, and hence requiring scrutiny by the Legislative Council under the provisions of the Interpretation and General Clauses Ordinance, Cap 1.

17. Under Section 33(1) of the Ordinance, the Commissioner for Transport ("the Commissioner") may by notice in the Gazette determine the maximum fares that may be charged for the carriage of passengers, baggage, goods and vehicles on any licensed ferry service. Whether or not these notices are "subsidiary legislation" will depend upon whether they fall within the definition of that expression in the Interpretation and General Clauses Ordinance.

18. "Subsidiary legislation" is defined by section 3(1) of the Interpretation and General Clauses Ordinance as being any proclamation, rule, regulation, order, resolution, notice, rule of court, by-law or other instrument made under or by virtue of any Ordinance and having legislative effect. As the notices are made under an Ordinance, the crux of the matter is whether the Commissioner's determinations of maximum fares for licensed services have legislative effect. If they do have such effect, then the determinations are subsidiary legislation, as defined.

19. Since the coming into operation of the Ordinance on 15 June 1982 all the Commissioner's determinations of maximum fares for licensed services have been published as general notices in the Gazette; to date, no determination of maximum fares on licensed services has been treated as subsidiary legislation or as having legislative effect.

20. "Legislative effect" is not defined in the Laws of Hong Kong nor is there any direct authority on its meaning. However, in considering whether the Commissioner's determinations have such effect, the Administration adopted the criteria, culled from case authorities. In essence these criteria provide that the Commissioner's determinations will have legislative effect if -
  1. there is an express provision identifying the instrument as being subsidiary legislation;

  2. the instrument extends or amends existing legislation;

  3. the instrument has general application to the public or a class, or to a significant section of the public as opposed to individuals; and

  4. the instrument formulates a general rule of conduct without reference to particular cases operating in the future.
21. Applying each of the above criteria to the Commissioner's determinations, it is noted that -
  1. there is no express provision in the Ordinance identifying the Commissioner's determinations of maximum fares for licensed services as being subsidiary legislation;

  2. as a matter of fact and law, the determination does not amend or extend the Ordinance;

  3. the determinations made by the Commissioner bind the licensees in that they cannot charge a fare exceeding the maximum determined by the Commissioner. It applies to individuals, i.e. the ferry licensees, and accordingly does not have general application to the public or to a significant sector of the public;

  4. the determinations do not formulate a general rule of conduct as only the licensees are subject to them.
22. The Administration therefore concludes on the basis of the above criteria that the Commissioner's determinations do not have legislative effect.

23. In addition, during the passage of the Ferry Services Bill 1982, it was clear that the legislative intent was to empower the Commissioner to determine fares for licensed services, and it is noted that the legislature did not debate or question the conferment of the power upon the Commissioner. Since then, as a matter of fact, such determinations of maximum fares for licensed ferry services are carried out as executive or administrative acts resulting from the exercise of statutory powers.

24. The Administration's views are that the notices in the Gazette under section 33(1) do not have legislative effect and are therefore not subsidiary legislation requiring to be laid on the table of the Legislative Council under section 34 of the Interpretation and General Clauses Ordinance, Cap 1.

Transport Bureau
23 November 1998

Annex A

Background Information on Successful Tenderers

Name of TendererBackground Existing Ferry Services Operated
Hongkong and Yaumati Ferry Co. Ltd. Existing ferry operator. 12 franchised services (6 outlying, 5 inner-harbour and 1 new town) and 6 licensed services.
Hong Kong and Kowloon Ferry Ltd. A company formed in early 1998 by small local ferry operators previously engaged in the provision of charterhire services. Two of the directors own shipyards in Hong Kong and mainland China. 3 licensed ferry services
    · Tsuen Wan - Central (via Tsing Yi)

    · Aberdeen - Yung Shue Wan (via Pak Kok Tsuen)

    · Pak Kok Tsuen - Central



Annex B

(page 1 of 3)

Summary of Operation Features of Successful Tenderer

Package I

　

Cheung Chau – Central

Inter-Islands

Cheung Chau – Kowloon Point
　

Existing

From 1.4.1999

Existing

From 1.4.1999

Excursion Service

No. of trips

  • Peakest hour
  • Whole day

4 (1 fast+3 conventional)

58 (13 fast+45 conventional)

5 (3 fast+2 conventional)

83 (49 fast+34 conventional)

No particular peak hour

16 conventional

No particular peak hour

19 conventional

4 fast on Sat (pm)

8 fast on SuPH

Fares

1999

  • Fast ferries
  • Conventional ferries
  • Monthly ticket

2000

  • Fast ferries
  • Conventional ferries
  • Monthly ticket

$24

$9.7 (ordinary class)

$17 (deluxe class)

$400

-

$20

$10 (ordinary class)

$16 (deluxe class)

$400

$21

$10.5 (ordinary class)

$16.8 (deluxe class)

$420

$7 (ordinary class)

-

-

$8 (ordinary class)

$10 (deluxe class)

-

$8.4 (ordinary class)

$10.5 (deluxe class)

$30

-

-

$31

-

-

Journey Time

1999 & 2000

  • Fast ferries
  • Conventional ferries

35 min

57 min

32 min

48 min

-

46 min

-

46 min

32 min

-

Vessel deployment

1999 & 2000

  • Fast ferries
  • Conventional ferries

1 (200 seats, partial a/c)

5 (1300 seats, partial a/c)

5 (200-430 seats, full/partial a/c)

2 (1500-1600 seats, partial a/c)

1 (600 seats, no a/c)

-

1 (400 seats, partial a/c)

1 (200 seats, partial a/c)

-

Annex B

(page 2 of 3)

Summary of Operation Features of Successful Tenderer

Package II

　

Mui Wo – Central

Peng Chau – Central

Mui Wo – Kowloon Point
　

Existing

From 1.4.1999

Existing

From 1.4.1999

Excursion Service

No. of trips

  • Peakest hour
  • Whole day

4 (1 fast+3 conventional)

49 (9 fast+40 conventional)

4 (2 fast+2 conventional)

58 (38 fast+20 conventional)

3 conventional

46 (8 fast+38 conventional)

4 (2 fast+2 conventional)

52 (29 fast+23 conventional)

4 conventional on Sat (pm)

8 conventional on SuPH

Fares

1999

  • Fast ferries
  • Conventional ferries
  • Monthly ticket

2000

  • Fast ferries
  • Conventional ferries
  • Monthly ticket

$24

$9.7 (ordinary class)

$17 (deluxe class)

$400

-

$20

$10 (ordinary class)

$16 (deluxe class)

$400

$21

$10.5 (ordinary class)

$16.8 (deluxe class)

$420

$24

$9.2 (ordinary class)

$17 (deluxe class)

$400

-

$20

$10 (ordinary class)

$16 (deluxe class)

$400

$21

$10.5 (ordinary class)

$16.8 (deluxe class)

$420

-

$15 (ordinary class)

$24 (deluxe class)

-

$15.7 (ordinary class)

$25 (deluxe class)

Journey Time

1999 & 2000

  • Fast ferries
  • Conventional ferries

35 min

60 min

31 min

48 min

25 min

50 min

25 min

38 min

-

48 min

Vessel deployment

1999 & 2000

  • Fast ferries
  • Conventional ferries

1 (105 seats, full a/c)

5 (1300 seats, partial a/c)

2 (200 seats, partial a/c)

2 (500-1300 seats, partial a/c)

1 (105 seats, full a/c)

2 (500-1300 seats, partial a/c)

2 (200 seats, partial a/c)

2 (500-1500 seats, partial a/c)

-

1 (500 seats, partial a/c)

Annex B

(page 3 of 3)

Summary of Operation Features of Successful Tenderer

Package III

　

Yung Shue Wan – Central

Sok Kwu Wan – Central
　

Existing

From 1.4.1999

Existing

From 1.4.1999

No. of trips

  • Peakest hour
  • Whole day

4 (2 fast+2 conventional)

46 (14 fast+32 conventional)

4 (3 fast+1 conventional)

57 (21 fast+36 conventional)

-

20 conventional

-

22 fast

Fares

1999 & 2000

  • Fast ferries
  • Conventional ferries
  • Monthly ticket

$15

$9.2 (ordinary class)

$17 (deluxe class)

$400

　

$15

$10

-

$450

-

$9.2 (ordinary class)

$17 (deluxe class)

$400

$13

-

-

$450

Journey Time

1999 & 2000

  • Fast ferries
  • Conventional ferries

22 min

42 min

20 min

30 min

-

50 min

35 min

-

Vessel deployment

1999

  • Fast ferries
  • Conventional ferries

2000

  • Fast ferries
  • Conventional ferries

1 (200 seats, partial a/c)

2 (600-1000 seats, partial a/c)

-

2 (200-400 seats, partial a/c)

2 (450 seats, partial a/c)

2 (200-400 seats, partial a/c)

2 (450 seats, partial a/c)

-

1 (400 seats, partial a/c)

-

1 (100 seats, full a/c)

-

1 (200 seats, full a/c)

-