For information


Consultancy Study on Private Sector Participation in the Provision of Water Supply Services


This note informs Members of Government's initiative to commission a consultancy study on private sector participation in the provision of water supply services and its impact, if any, on staff.


2. As an on-going exercise, Government has been exploring ways to enhance the efficiency and quality of services provided by Government. We are in the process of commissioning a consultancy study to examine the feasibility of private sector participation in the provision of water supply services. The purpose is to study the feasibility of various forms of private sector participation in water supply and the benefits, if any, that may be gained by the public and Government.

3. The study will examine various options for private sector participation (including privatisation, corporatisation, contracting out, etc) in the provision of water supply services, taking into account overseas experience. The consultant will be asked to make recommendations having regard to the existing situation and arrangements in Hong Kong. The study is scheduled to commence in late November 1998 and is expected to take three to four months to complete. Government has no preconceived ideas about the outcome of the study. We will examine the consultants* views carefully before deciding the best way forward.


4. It is understandable that staff of the Water Supplies Department (WSD) will be concerned about possible changes that may be brought about in the operation of water supply services and the likely impact on their present employment arising from the consultancy study. In order to ensure that the staff are kept fully briefed on this exercise, the management of WSD briefed the WSD Staff Consultative Committee, the various Staff Unions and Association in June this year before Government invited consultancy companies to express interest in undertaking the study.

5. The present consultancy study is a preliminary exercise and the consultant's recommendations will be subject to further examination by Government. Upon completion of the study, Government will consider very carefully the feasibility of the consultant's recommendation in the light of local circumstances, including the degree to which such an approach would impact on existing WSD staff.


6. It would be premature to speculate at this stage what effect there might be on staff in WSD. It is our policy to keep the staff fully informed of all developments and to consult them early on any proposals which may affect them.

7. Where staff are identified as being surplus to requirement as a result of reorganisation or privatisation exercises, it is the Administration's policy to redeploy as far as possible the affected staff within the civil service. If after exhaustive efforts have been made and redeployment has not been possible, the affected staff will have to be retired from the service on abolition of office terms according to statutory provisions. The guidelines for such arrangements have been set out in Civil Service Bureau Circular 26/91, copy attached.


8. We shall monitor the consultancy study closely and critically examine any proposals which may have an impact on WSD's staffing requirements. We will maintain an on-going dialogue with the staff and take into account their concerns before a decision is taken on the outcome of the study.

Works Bureau
9 November 1998