Drainage Services Department - Sustainability Report 2013-2014

Operation Efficiency

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[highlight9.png 1,021 million m3 Annual Sewage Treatment Volume]

The two major types of expenses in DSD in relation to providing wastewater and stormwater drainage services for the community are operational expenses and public works project expenses. Our day-to-day departmental operation is financed by the General Revenue Account of the Government, while funding for public works projects are approved on a project-by-project basis by the Finance Committee of the Legislative Council. To ensure public funds are used effectively, we strive to enhance operation efficiency by adopting new technologies and management practices.

Departmental Operating Expenditure

In 2013-14, the total expenditure of DSD was about 2.0 billion. Salaries accounted for about 794 million while the rest was contributed by other departmental expenses.

Our operating expenditure for the past five years is summarised below:

Summary of DSD Operating Expenditure for the Past Five Years	2009-10	2010-11	2011-12	2012-13	2013-14
	($M)
Operating Expenditure (Total)	1,736.9	1,776.8	1,838.6	1,910.7	1,972.4
Recurrent Expenditure - Personal Emoluments	693.0	685.9	727.4	769.3	793.5
Recurrent Expenditure - Departmental Expenses (including Mandatory Provident Fund & Civil Service Provident Fund)	1,035.9	1,083.8	1,111.2	1,141.4	1,178.9
Non-recurrent Expenditure	8.0	7.1	0.0	0.0	0.0

Summary of DSD Operating Expenditure in 2013-14

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Capital Works Project Expenditure

We conduct regular reviews and updates on the cost estimate, including cashflow of capital works projects in various stages taking due account of the prevailing market condition and risk factors. A departmental committee has been established for vetting the project estimates for inclusion in the Legislative Council papers and examining the pre-tender estimates of works contracts before tender invitation. Upon funding approval, the project cost will be closely monitored against the Approved Project Estimate to ensure adequate funds will be available for completing the planned works. The Director of Drainage Services chairs regular meetings to monitor the progress of all major capital works projects and to ensure that the funds allocated are effectively expended.

Value and Number of Drainage and Sewerage Projects under Planning, Design and Construction

	Unit	2009-10	2010-11	2011-12	2012-13	2013-14
Value of drainage projects under planning, design and construction	$M	13,373	12,707	14,323	11,288	12,311
Value of sewerage projects under planning, design and construction	$M	36,635	39,875	41,200	49,872	78,749
No. of drainage projects under planning, design and construction	No.	29	24	22	20	20
No. of sewerage projects under planning, designand construction	No.	58	70	70	77	87

Sewage Services Operating Accounts

The Sewage Services Charging Scheme (SSCS) was introduced on 1 April 1995 in accordance with the “Polluters Pay Principle”. Owners or occupants of premises connected to public sewerage network shall be required to pay the sewage services charges. To maintain a modest charging level, the scheme recovers only the operating and maintenance cost of public sewage facilities, while the construction cost is funded by public revenue.

Revenue and expenditure in the Sewage Services Operating Accounts for the past five years are summarised below:

Summary of Sewage Services Operating Accounts for the Past Five Years	2009-10	2010-11	2011-12	2012-13	2013-14^#
	($M)
Sewage Charge Revenue	583	639	703	776	875
Trade Effluent Surcharge Revenue	192	201	204	207	221
Other Revenue	35	35	40	40	42
Overall Revenue	810	875	947	1,023	1,138
Expenditure (excluding depreciation)	(1,377)	(1,402)	(1,484)	(1,538)	(1,586)
Depreciation	(698)	(723)	(782)	(801)	(846)
Overall Expenditure	(2,075)	(2,125)	(2,266)	(2,339)	(2,432)
(Deficit)	(1,265)	(1,250)	(1,319)	(1,316)	(1,294)

Notes: # The 2013-14 figures are provisional and subject to endorsement by the Sewage Services Accounts Committee.

Overall Revenue of Sewage Services Operating Accounts Breakdown in 2013-14 ($M)

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Overall Revenue and Expenditure in the Sewage Services Operating Accounts ($M)

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Sewage Services Operating Cost Recovery Rate

Sewage services cost recovery rates in 2012-13 and 2013-14 are tabulated below:

	Total
	2012-13	2013-14
Revenue of Sewage Charge and Trade Effluent Surcharge ($M)	983	1,096
Expenditure (excluding depreciation) of Sewage Charge and Trade Effluent Surcharge ($M)	1,498	1,544
Operating Cost Recovery Rate (%)	65.6	69.0

Notes:

"Miscellaneous services" are excluded from the above calculation.
Depreciation is not recovered through the Sewage Charge and Trade Effluent Surcharge.
The 2013-14 figures are provisional and subject to endorsement by the Sewage Services Accounts Committee.

Adjustment of the Sewage Charge

To enforce the "Polluter Pays Principle" and provide incentive to the public to conserve water resources, the Legislative Council approved a gradual increase of the sewage charge for 10 years starting from May 2007. Compared to the sewage charge rate of $1.20 per cubic metre of water supplied in 2007-08, the rate has been revised to $2.05 per cubic metre of water supplied in 2013-14 and will gradually increase to $2.92 on 1 April 2017 and onwards.

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