Provisional Legislative Council
Economic Services Panel
Public Cargo Working Areas Management Reform
The purpose of this paper is to inform Members of the progress of the Public Cargo Working Areas (PCWAs) Management Reform.
2. PCWAs are designated waterfront areas used for cargo handling. They are managed by the Marine Department (MD). Currently, the berths in PCWAs are allocated to cargo barge operators on a "first-come-first-served" basis and the use is charged on a daily basis. This arrangement has created many management problems and has been criticised by the Director of Audit (D of A). In his report published in 1995, D of A identified the following problems with the ' first-come-first-served ' arrangement:
- monopolisation of berths by habitual users and unfair access to other operators;
- subletting of berths by non-legal means at the expense of government revenue;
- very low productivity (poor efficiency and utilisation); and
- poor financial return and heavy public subsidy to commercial operators in PCWAs.
3. D of A and the consultant appointed by the MD to study the management of PCWAs both observed that the exceptionally low fees currently charged for the use of PCWA berths have encouraged many operators to use idle barges to occupy and monopolise the use of the berths, resulting in the low productivity and inefficient use of the berthing spaces. D of A recommended that the berths should be allocated by an open and competitive bidding process. The recommendation was supported by the Public Accounts Committee of the Legislative Council.
4. In response to the recommendation of the D of A and the Public Accounts Committee, we have consulted the Economic Services Panel of the then Legislative Council and organisations representing the existing operators on a proposal to tender out the berths. The operators saw the need to change the current berth allocation system but were concerned that they would be forced out of business if they failed to bid for a berth in their existing operating area. They were also concerned that the reserve price would be set too high beyond what they could afford. To address their concerns and to allow more time for the operators to adjust to operating under a market mechanism, we have decided to implement the management reform in phases. The first phase of reform involves allocating the berths to the existing operators by restricted tenders under the following regional bidding arrangement :
- Kowloon East Region - Kwun Tong and Cha Kwo Ling PCWAs;
- Kowloon West Region - Tsuen Wan and Yaumatei PCWAs;
- New Territories Region - Tuen Mun and Rambler Channel PCWAs; and
- Hong Kong Region - Chai Wan, Wanchai, Sheung Wan and Western District PCWAs.
5. This regional bidding arrangement would ensure that operators who are prepared to bid for a berth will not be relocated away from their current operating areas.
6. The successful bidders will be given the right to occupy the berths for three years on payment of a monthly rent. The unbidden berths will be allocated by way of open tenders. The reserve price has also been reduced to address the operators ' concern.
7. The restricted tender exercise was closed on 1 August 1997. The majority of existing operators (over 90 %) have submitted their bids in accordance with the gazetted tender requirement. After the allocation of the berths, we will consider the possibility of reorganising the berths with the view to closing down, if possible, some unpopular PCWAs on the Hong Kong side in accordance with D of A ' s recommendation. This will help to reduce the management costs and release the land for other competing community uses. Afterwards, open tenders will be invited from the public for bidding the remaining berths.
8. As part of the first phase of reform, we will review, together with PCWA operators, within six months after letting out the berths, the land side management of PCWAs including vehicle parking fees and cargo storage fees, etc. The objective of the review is to simplify the fee and management structure, so as to reduce MD ' s management costs, facilitate operators ' business, and improve the productivity and efficient operation of PCWA berths.
9. The Administration ' s long-term objective remains to contract out the entire management of PCWAs. We will review the experience of the first phase of reform before deciding on the next phase of reform.
Economic Services Bureau
Date : 3 September 1997