Pun-Lee Lam

Electricity consumption and economic growth in China

Abstract This paper applies the error-correction model to examine the causal relationship between electricity consumption and real GDP for China during 1971–2000. Our estimation results indicate that real GDP and electricity consumption for China are cointegrated and there is unidirectional Granger causality running from electricity consumption to real GDP but not vice versa. In order to overcome the constraints on electricity consumption, the Chinese government has to speed up the nation-wide interconnection of power networks, to upgrade urban and rural distribution grids, and to accelerate rural electrification.

A data envelopment analysis of the efficiency of China's thermal power generation

Abstract This study applies the data envelopment analysis (DEA) approach to measure the technical efficiency of China’s thermal power generation based on cross-sectional data for 1995 and 1996. Our results show that municipalities and provinces along the eastern coast of China and those with rich supplies of coal achieved the highest levels of technical efficiency. There is no clear evidence of excess capacity. However, the presence of labor slack in many regions indicates that labor redundancy was a serious problem. In our second stage regression analysis, we find that fuel efficiency and the capacity factor significantly affect technical efficiency. Provinces and autonomous regions that were not under the control of the State Power Corporation (SPC) achieved higher levels of efficiency. The presence of foreign investment, however, did not have a significant effect on efficiency.

The growth of Japan's LNG industry: Lessons for China and Hong Kong

Abstract About 30 years ago, the Japanese government decided to import LNG from other countries. Since then, the LNG trade in Asia has been growing rapidly. Electric utilities in Japan have cooperated with the major gas companies to construct LNG receiving terminals and to import LNG from foreign countries. In China, the government is planning to construct the countrys first LNG terminal in Shenzhen, a municipality across the border from Hong Kong. The development of LNG projects will help overcome the problem of the security of supply of natural gas in South China. While mainland China can provide land and labour for the construction of LNG terminals, Hong Kong can provide capital and a market. China and Hong Kong can learn from Japanese experiences of introducing LNG for power generation, gas production and other non-utility uses.

Erosion of monopoly power by call-back. Lessons from Hong Kong

As Hong Kong Telecommunications International (HKTI) has been granted an exclusive licence to provide an international call service which does not expire until 2006, the Hong Kong Government could only pledge to open up the international facsimile and data services under the new WTO agreement. However, the exclusive licence does not really insulate HKTI from market competition brought about by technological developments. Evidence in Hong Kong has shown that the price differential between outgoing and incoming calls need not be so large before call-back operators are attracted to the business. Institutional arrangements have also allowed the prices of call-back services in Hong Kong to be well below the settlement rates. The competitive pressure exerted by call-back services has been understated by many analysts.

Transition to competition in Hong Kong's local telephone industry

The local telephone industry in Hong Kong has been expanding rapidly since the 1970s. Technology in the industry has advanced greatly and the Industry itself has undergone several regulatory reforms. The industry has moved from rate-of-return regulation to price-cap regulation, and is now moving to yet another regulatory system. Franchised oligopoly is replacing the old system of franchised monopoly in the local telephone industry. This paper describes the evolution of the local telephone industry in Hong Kong. Our focus is on the regulatory environment of the industry. The industry has been subject to a special form of rate-of-return regulation, called the Scheme of Control. Features of the Scheme of Control and its effect are discussed. Several regulatory issues arising in the transition of the industry to a new competitive structure are outlined, based on the experiences of the USA and UK markets.

Incentive Effects of Rate-of-Return Regulation in Hong Kong

A recent paper published by this journal (Peles and Whittred 1996) discussed the regulatory arrangement of the Scheme of Control in Hong Kong. Instead of encouraging electric utilities to finance their assets proportionately more by equity as argued by the authors, the Scheme has in fact given them an incentive to rely on debt financing. A major incentive aspect of the Scheme lies in the formation of a development fund for making internal transfers. This development fund arrangement has provided an incentive for the two electric utilities to improve efficiency and has facilitated the expansion of the electric power industry.

Restructuring the Hong Kong gas industry

In July 1995, the Consumer Council of Hong Kong published a report on the gas industry in Hong Kong. The Report attacked the non-interventionist and safety policies of the government as having helped the town gas monopolist to earn excessive profits, to the detriment of its customers. The Report proposed a restructuring of the gas industry, with an aim of introducing competition into the industry. This paper discusses the structure and performance of the energy industry in Hong Kong, outlining the major proposals of the Consumer Council and its methodology pitfalls. Based on the experiences of industry restructuring in the USA and UK, the author provides an alternative approach to restructuring the gas industry in Hong Kong.

Regulatory effects on electricity prices in Hong Kong

Abstract In Hong Kong, electricity is supplied by two investor-owned utilities: China Light and Power Company Limited (CLP) and the Hongkong Electric Company Limited (HEC). These two utilities operate under a special regulatory arrangement known as the Scheme of Control, which was proposed by the industry in 1964. The objective of this paper is to evaluate whether the Scheme of Control has fulfilled its original intention of protecting both the producer’s right to serve and the consumer’s right to be served. Our empirical results have indicated that the first Scheme of Control (1964–1978) had a greater effect on reducing electricity prices than the second one (1979–1992).

Privatizing water supply in Hong Kong

Abstract With the exception of the water supply industry, all major utilities in Hong Kong are owned and operated by private enterprises. In terms of price, returns, and productivity, the water supply industry in Hong Kong compares unfavourably with privately-owned utilities. The financial performance of the Water Supplies Department has been deteriorating in recent years. In order to improve the performance of the water supply industry, the Hong Kong Government should consider inviting the private sector to run the industry. Hong Kong can learn from other countries with regard to reforms made in the water supply industry.

The development of information infrastructure in Hong Kong

Given its geographical advantage and economic integration with mainland China, Hong Kong has naturally become a major communications centre in the Asia-Pacific region. A growing number of international telecommunications and broadcasting companies are establishing business relations with Hong Kong. Hong Kong has also become the first place in the world to launch video-on-demand service. Although these companies are equipped with new technology, their developments have been impeded by the policy inertia of the Hong Kong Government. The objectives of this paper are to highlight some of the regulatory issues posed by the new technology and to make policy recommendations for the removal of the structural barriers impeding Hong Kongs information infrastructure development.